Contents · 10/27/2009 · Market capitalisation (million euros) ... European Union and in conformity with Bank of Spain Circular 4/2004, together with the changes introduced therein

Contents

2 BBVA GROUP HIGHLIGHTS

3 GROUP INFORMATION

3 Relevant events

6 Earnings

14 Business activity

19 Capital base

21 The BBVA share

23 RISK AND ECONOMIC CAPITAL MANAGEMENT

23 Risk management

27 Economic profit and risk-adjusted return on economic capital

28 BUSINESS AREAS

30 Spain and Portugal

35 Wholesale Banking & Asset Management

39 Mexico

43 The United States

47 South America

51 Corporate Activities

54 CORPORATE RESPONSIBILITY

Q U A R T E R L Y R E P O R T

January-September

2009

2

3Q09

BBVA Group Highlights

BBVA Group Highlights(Consolidated figures)

30-09-08 31-12-08

BALANCE SHEET (million euros)Total assets

Total lending (gross)

Customer funds on balance sheet

Other customer funds

Total customer funds

Total equity

Shareholders' funds

INCOME STATEMENT (million euros)Net interest income

Gross income

Operating income

Income before tax

Net attributable profit

Net attributable profit excluding one-off operations (1)

DATA PER SHARE AND SHARE PERFORMANCE RATIOSShare price (euros)

Market capitalisation (million euros)

Net attributable profit per share (euros)

Net attributable profit per share excluding one-off operations (euros) (1)

Book value per share (euros)

Tangible book value per share (euros) (2)

P/BV (Price/book value; times)

Price/tangible book value (times) (2)

SIGNIFICANT RATIOS (%)ROE (Net attributable profit/Average equity)

ROE excluding one-off operations (1)

ROA (Net income/Average total assets)

ROA excluding one-off operations(1)

RORWA (Net income/Risks weighted assets)

RORWA excluding one-off operations (1)

Efficiency ratio (3)

Cost of risk excluding one-off operations (1)

NPA ratio

NPA coverage ratio

CAPITAL ADEQUACY RATIOS (BIS II Regulation) (%)Ratio BIS

Core capital

Tier I

OTHER INFORMATIONNumber of shares (millions)

Number of shareholders

Number of employees

Number of branches

Memorandum item: the data on this Quarterly Report has not been audited. It has been prepared according to the International Financial Reporting Standards adopted by theEuropean Union and in conformity with Bank of Spain Circular 4/2004, together with the changes introduced therein by Bank of Spain Circular 6/2008. Therefore, they may notcoincide with those published in the Quarterly Reports of the previous years.(1) In 2008, capital gains from Bradesco in the first quarter, provisions for non-recurrent early retirements in the second and fourth quarters and provision for the loss originated by

the Madoff fraud in the fourth quarter. In the third quarter of 2009, capital gains on the sale and lease-back of properties which have been allotted to generic provisions for NPLs.(2) Net of goodwill.(3) Except otherwise stated, efficiency ratio including depreciation.

30-09-09

537,305 1.8 527,932 542,650

331,005 (4.0) 344,641 342,671

366,581 3.2 355,283 376,380

133,115 (3.1) 137,371 119,017

499,695 1.4 492,654 495,397

30,707 12.3 27,336 26,705

29,997 12.9 26,575 26,586

10,292 19.7 8,599 11,686

15,378 6.6 14,420 18,978

9,274 13.5 8,167 10,523

5,950 (5.5) 6,298 6,926

4,179 (7.2) 4,501 5,020

4,179 (3.3) 4,321 5,414

12.13 5.8 11.46 8.66

45,463 5.8 42,952 32,457

1.12 (7.2) 1.21 1.35

1.12 (3.3) 1.16 1.46

8.00 12.9 7.09 7.09

6.17 18.2 5.22 5.02

1.5 1.6 1.2

2.0 2.2 1.7

21.2 25.5 21.5

21.2 24.8 23.2

1.11 1.25 1.04

1.11 1.21 1.12

2.05 2.32 1.95

2.05 2.25 2.08

39.7 43.4 44.6

1.10 0.77 0.82

3.4 1.7 2.3

68 127 92

13.4 12.5 12.2

8.0 6.7 6.2

9.4 8.1 7.9

3,748 3,748 3,748

896,433 886,950 903,897

104,723 112,621 108,972

7,554 7,909 7,787

Δ%

In the third quarter of 2009 BBVA continued to

demonstrate the strength and high level of recurrent

earnings with net attributable profit of €1,380m in the

quarter. Once again this was supported by the growth

of net interest income and the containment of

operating costs. Furthermore the Group made

substantial progress in strengthening its capital

adequacy, adding gains from the sale of real estate in

Spain and from the placement of a convertible bond

issue, to the additional capital generated organically.

In terms of credit risk, new additions to

non-performing assets declined.

The most relevant aspects of the BBVA Group’s

performance in its main business areas during the third

quarter are summarised below:

Recurrent revenues increased. In the year-to-date

net interest income rose 19.7% year-on-year thanks

to a successful pricing policy and to appropriate

management of the balance sheet in the context of a

slowdown in business. This positive performance

helped to offset the smaller volume of other

revenues, helping gross income for the first nine

months to grow 6.6% compared to the same period

last year (up 9.7% at constant exchange rates).

Operating costs are dropping at a faster rate, falling

2.4% year-on-year in the year to 30-Sep-09. This

helped to lift operating income for the same period

to €9,274m, an increase of 13.5% compared to the

first nine months of last year (up 18.1% at constant

exchange rates).

The Group completed the sale and lease-back of 948

properties in Spain (mainly branches) for €1,154m,

generating €830m in capital gains. These gains were

used to increase the Group’s generic loan-loss

provisions and therefore had no impact on net

attributable profit.

Impairment losses on financial assets stabilised

further during the quarter, again at around 30% of

operating income (excluding the €830m mentioned

above).

All business areas contributed to the Group’s net

attributable profit, which came to €4,179m for the

first nine months. As a result BBVA continues to be

one of the most profitable big banking groups with

an ROE of 21.2% and ROA of 1.11%.

BBVA’s loan portfolio continues to preserve its high

quality and to generate good news in terms of risk

management. On one hand, gross additions to

non-performing assets continue to decline as well as

the the well-conceived policy of recoveries, in a

context of highly selective purchases of properties.

This helps to slow the growth of the non-performing

asset ratio. And on the other hand, the decision to use

the capital gains from the sale and lease-back of the

bank’s properties to increase the generic provision has

improved the coverage ratio. As a result of these

developments BBVA ended the quarter with the non-

performing asset ratio at 3.4%, 73 basis points lower

than the average for its European competitors (based

on the latest available figures). The coverage ratio

stands at 68%.

Two aspects of the capital base deserve a mention.

First, the Group’s ability to generate core capital

organically was again apparent in the third quarter,

contributing 20 basis points. Second, in September

the bank placed a €2,000m bond issue, convertible

to ordinary shares, which will provide additional

flexibility in capital management. Thus core capital

rose to 8.0% at 30-Sep-09 (7.1% at 30-Jun-09) and

the BIS ratio increased to 13.4% (12.3% at

30-Jun-09).

At the end of the third quarter BBVA also had

€1,711m in latent capital gains on its more liquid

portfolios of equity holdings. The above is without

adding capital gains on other portfolios.

As customary at this time, BBVA paid a second

interim dividend of €0.09 per share in cash against

2009 earnings on 12-Oct-09.

The Spain & Portugal Area contributed €1,877m to

the Group’s net attributable profit. This was similar

3

3Q09

Group information

Relevant events

anticipating BBVA Compass’s plans for organic

growth in the Sunbelt. This operation is another

sign of BBVA’s strength and solid capital position,

which allows it to tackle such operations and to

take advantage of opportunities even in difficult

times such as those in the international financial

sector.

Lastly, South America turned in another very

positive quarter despite the general business

slowdown. Revenues increased significantly and

expenses were kept under progressive control

without impairing asset quality. In the first nine

months the area’s net attributable profit rose 27.5%

year-on-year to €689m (up 27.8% at current

exchange rates).

Economic environment

The outlook for the global economy is still surrounded

by considerable uncertainty. Although the measures

adopted around the world could rebuild confidence and

result in sustainable recovery, if they fail to achieve an

appropriate balance between economic stimulus and

long-term sustainability, the financial markets could

again become unfavourable.

In Europe the economy appears to be recovering.

Forecasts point to GDP growth in the second half,

although it may be close to zero, and surveys related to

the third quarter confirm the feeling of stabilisation.

Overall, uncertainty is still high and the volatility of

some figures calls for cautious interpretation. The

European Central Bank has decided to maintain rates

at a low level and believes this is appropriate in a

context in which inflation is expected to turn slightly

positive in the coming months.

In the United States the speed of the economic

slowdown has moderated in recent quarters and

various indicators, such as demand and the housing

market, are showing positive signs. Consumer

confidence has improved and the housing market

appears to be stabilising in terms of volume and prices.

However the job market continues to degenerate. For

this reason the authorities decided to keep interest rates

low to preserve the stability of the financial system and

to stimulate consumption.

to the same period last year. Although banking

business is slowing, the more conservative lending

performed well in the quarter, including residential

mortgages and lending to institutions and large

companies. Savings and current accounts, and

pension funds also performed well. As mentioned,

gross additions to non-performing assets continued

to slow, and as a result the increment in the

non-performing asset ratio was less than previous

quarters. Lastly, capital gains from the sale and

lease-back of real estate were used to strengthen the

bank’s balance sheet by allocating them entirely to

generic loan-loss provisions.

The Wholesale Banking & Asset Management

Area continued to demonstrate the strength and

success of its business model based on customer

focus, as reflected by the high percentage of

recurrent earnings. Corporate & Investment

Banking and Global Markets enjoyed an excellent

quarter, which largely offset lower revenues from

divestments of industrial and real estate holdings.

Moreover, containment of administration costs and

the lower level of loan-loss provisions helped

income before tax in the first nine months to

increase 16.0% compared to the same period last

year. Nonetheless net attributable profit is only

3.7% higher because the capital gains recognised in

2008 were taxed at a low rate.

Despite the significant deterioration of its economy

and the drop in business, in Mexico revenues rose

4.8% year-on-year in local currency. Strict control of

costs explains the 7.1% rise in operating income.

Impairment on financial assets and provisions were

at similar levels of previous quarters in a context of

deceleration of the growth of the NPA ratio. The

improvement in operating income offset the higher

provisions and thus net attributable profit was in

line with previous quarters (€1,101m for the

year-to-date).

In the United States BBVA continued to generate

earnings without the need for government help and

despite the very difficult economic context. In

August BBVA Compass acquired the operations of

Guaranty Bank from the Federal Deposit Insurance

Corporation (FDIC). This reinforces the Group’s

presence in this country, complementing and

4

GROUP INFORMATION 3Q09Relevant events

Regarding end-of-period exchange rates the dollar; the

Mexican, Argentinean and Chilean pesos, and the

Venezuelan bolivar fuerte have depreciated year-on-year

and quarter-on-quarter. On the other hand, the

Peruvian nuevo sol and especially the Colombian peso

have appreciated in both cases. As a result they reduce

the growth of figures on the balance sheet and income

statement.

Average exchange rates mostly declined year-on-year.

The Mexican peso fell 14.1% against the euro, the

Argentine peso fell 6.7%, the Colombian peso 6.5%

and the Chilean peso 5.8%. The US dollar and the

Venezuelan bolivar fuerte appreciated 11.4% and the

Peruvian nuevo sol rose 4.6%. As a result exchange

rates have a negative effect on the year-on-year

comparisons of the income statement amounting to

about four percentage points.

The Mexican economy showed signs of gradual

recovery in the third quarter and this indicates the

worst part of the crisis is over. Indicators such as

manufacturing and industrial production are expected

to continue to show signs of monthly growth,

confirming the gradual improvement of the economy.

Inflation maintains its downward trend although a

rebound is expected at the beginning of next year

provided the government reforms to increase tax rates

and adjust certain regulated prices are approved.

In South America most countries have seen GDP

growth slowdown due to falling external and internal

demand. Nonetheless the situation is more positive

than other regions and recovery is expected. The

inflation rate is declining and many central banks have

cut interest rates further.

5

3Q09 GROUP INFORMATIONRelevant events

Interest rates(Quarterly average)

Official ECB rate

Euribor 3 months

Euribor 1 year

Spain 10-year bond

USA 10-year bond

USA Federal rates

TIIE (Mexico)

1.00 1.10 1.92 3.28 4.24 4.00 4.00

0.87 1.31 2.01 4.24 4.98 4.86 4.48

1.34 1.67 2.22 4.38 5.37 5.05 4.48

3.92 4.16 4.17 4.16 4.65 4.54 4.17

3.50 3.30 2.70 3.20 3.84 3.86 3.65

0.25 0.25 0.25 1.07 2.00 2.08 3.19

4.90 5.89 8.00 8.71 8.49 7.96 7.93

1Q2Q3Q4Q3Q 2Q 1Q

2009 2008

Exchange rates(Expressed in currency/euro)

Mexican peso

U.S. dollar

Argentine peso

Chilean peso

Colombian peso

Peruvian new sol

Venezuelan bolivar fuerte

19.7453 (20.4) (6.0) (2.6) 18.6282 (14.1)

1.4643 (2.3) (3.5) (5.0) 1.3665 11.4

5.6339 (20.1) (3.9) (12.7) 5.1352 (6.7)

799.36 (1.2) (6.4) 10.8 781.25 (5.8)

2,816.90 10.2 8.2 10.9 3,021.15 (6.5)

4.2311 0.8 0.6 3.2 4.1693 4.6

3.1443 (2.3) (3.5) (5.0) 2.9342 11.4

Δ% on 30-09-08

Δ% on 30-06-09

Δ% on 31-12-08

30-09-09

Year-end exchange rates Average exchange rates

Jan.-Sep. 09Δ% on

Jan.-Sep. 08

6

3Q09

In the third quarter of 2009 the BBVA Group’s earnings

remained in line with those of previous quarters:

Recurrent revenues, owing to successful

management of prices and of structural risks on the

balance sheet.

The cost containment measures in recent years

continue to provide benefits, as reflected by the

year-on-year decline in operating costs.

The above factors contributed to the strength of

operating income, with positive participation from

all the Group’s business areas.

Improved solvency: BBVA generated capital gains

by the sale and lease-back of a number of branches

in Spain. The entire amount was allocated to

generic loan-loss provisions with the goal of

strengthening the Group’s balance sheet.

Impairment losses on financial assets in the quarter,

expressed as a percentage of operating income and

excluding the additional provisions mentioned

above, remained unchanged.

Net attributable profit was stable, supported by

contributions from all business areas. The

Earnings

Consolidated income statement(Million euros)

NET INTEREST INCOME

Net fees and commissions

Net trading income

Dividend income

Income by the equity method

Other operating income and expenses

GROSS INCOME

Operating costs

Personnel expenses

General and administrative expenses

Depreciation and amortization

OPERATING INCOME

Impairment on financial assets (net)

Provisions (net)

Other gains (losses)

INCOME BEFORE TAX

Income tax

NET INCOME

Minority interests

NET ATTRIBUTABLE PROFIT

One-off operations (1)

NET ATTRIBUTABLE PROFIT (excluding one-off operations)

EARNINGS PER SHARE CALCULATION

Average ordinary shares in circulation (million)

Basic earnings per share (euros)

Basic earnings per share excluding one-offs (euros)

(1) In 2008, capital gains from Bradesco in the first quarter and extraordinary charges for early retirements in the second quarter. In the third quarter of 2009, capital gains on the saleand lease-back of properties which have been allotted to generic provisions for NPLs.

10,292 19.7 23.5 8,599

3,267 (4.5) (1.9) 3,422

1,124 (20.8) (18.9) 1,419

290 (27.9) (28.2) 402

6 (97.8) (97.8) 268

399 28.9 34.0 309

15,378 6.6 9.7 14,420

(6,105) (2.4) (1.0) (6,252)

(3,417) (3.1) (2.0) (3,528)

(2,159) (2.4) 0.2 (2,213)

(528) 3.2 0.7 (512)

9,274 13.5 18.1 8,167

(3,686) 77.1 84.1 (2,082)

(234) (60.6) (59.9) (594)

597 (25.9) (25.2) 805

5,950 (5.5) (1.9) 6,298

(1,418) (7.3) (4.1) (1,529)

4,532 (5.0) (1.2) 4,768

(353) 32.0 26.1 (268)

4,179 (7.2) (3.0) 4,501

- n,s n,s 180

4,179 (3.3) 1.3 4,321

3,715 0.1 3,713

1.12 (7.2) 1.21

1.12 (3.3) 1.16

Δ%Δ% at constant exchange rates

Jan.-Sep. 09 Jan.-Sep. 08

7

3Q09 GROUP INFORMATIONEarnings

incorporation of Guaranty Financial Group in

August 2009 had almost no impact on earnings.

The above circumstances helped the Group to

continue generating core capital organically and the

amount is higher than anticipated.

Net interest income

Net interest income is the main support of the Group’s

revenues. In the third quarter it came to €3,434m, an

increase of 12.9% over the same quarter of last year.

The amount for the first nine months is €10,292m, an

increase of 19.7% compared to €8,599m in the same

period last year (up 23.5% at constant exchange rates).

The main reasons behind this growth are the active

commercial policies of the business areas and the

appropriate management of structural risks on the

balance sheet.

In recent quarters commercial policies have focused on

three factors: passing on the higher cost of credit risk

Consolidated income statement: quarterly evolution(Million euros)

NET INTEREST INCOME


Net trading income

Dividend income

Income by the equity method

Other operating income and expenses

GROSS INCOME

Operating costs

Personnel expenses



OPERATING INCOME


Provisions (net)

Other gains (losses)

INCOME BEFORE TAX

Income tax

NET INCOME

Minority interests



NET ATTRIBUTABLE PROFIT (excluding one-off operations)

EARNING PER SHARE

Earning per share (euros)

Earning per share excluding one-off operations (euros)

(1) In 2008, capital gains from Bradesco in the first quarter, provisions for non-recurrent early retirements in the second and fourth quarters and provision for the loss originated bythe Madoff fraud in the fourth quarter. In the third quarter of 2009, capital gains on the sale and lease-back of properties which have been allotted to generic provisions for NPLs.

3,434 3,586 3,272 3,088 3,043 2,829 2,726

1,086 1,102 1,079 1,105 1,138 1,153 1,131

325 435 364 139 260 568 591

42 207 41 45 161 186 56

(21) 22 4 25 95 34 139

130 140 129 157 96 83 130

4,998 5,491 4,889 4,558 4,794 4,854 4,772

(2,017) (2,017) (2,070) (2,203) (2,099) (2,069) (2,084)

(1,127) (1,130) (1,161) (1,188) (1,185) (1,165) (1,178)

(716) (709) (734) (827) (740) (743) (730)

(174) (178) (175) (187) (174) (161) (177)

2,981 3,474 2,819 2,355 2,695 2,784 2,688

(1,741) (1,029) (916) (859) (917) (607) (557)

(82) (48) (104) (837) 18 (467) (145)

789 (228) 36 (30) 11 (2) 796

1,947 2,168 1,834 629 1,807 1,708 2,783

(457) (480) (480) (12) (316) (476) (738)

1,490 1,688 1,354 617 1,491 1,232 2,045

(110) (127) (116) (98) (99) (75) (94)

1,380 1,561 1,238 519 1,392 1,157 1,951

- - - (575) - (329) 509

1,380 1,561 1,238 1,094 1,392 1,486 1,442

0.37 0.42 0.34 0.14 0.38 0.31 0.53

0.37 0.42 0.34 0.30 0.38 0.40 0.39

1Q2Q3Q4Q2Q 1Q3Q

2009 2008

8

GROUP INFORMATION 3Q09Earnings

and repreciations, to a smaller proportion of portfolios

with greater risk (such as consumer finance) and to an

increase in low-cost liquid funds.

The management of structural risks, such as interest

and liquidity risk, was characterised by anticipation

and strict prudence. This helped to create a solid

balance sheet whose main features are low leveraging

and a lower risk profile. On one hand, the bank built

up portfolios in different countries that helped to

stabilise net interest income and the economic value of

the balance sheet. And on the other hand, the strong

growth of lending in previous years was financed by

liabilities that were suitable structured in terms of

maturity, type of instrument and diversification. So,

by forgoing short-term earnings in favour of

long-term stable ones, it created ample liquidity and

diversified the sources of finance. This in turn helped

to minimise the cost of funds. As a result, it is now

and liquidity to lending operations and containing the

cost of funds; identifying products or segments with

better risk-adjusted returns; and optimising the

structure of customer funds. These actions led to an

improvement in the entry prices both of new operations

Breakdown of yields and costs

Cash and balances with central banks

Financial assets and derivatives

Loans and advances to credit institutions

Loans and advances to customers

•Euros

- Domestic

- Other

•Foreign currencies

Other assets

TOTAL ASSETS

Deposits from central banks and credit institutions

Deposits from customers

•Euros

- Domestic

- Other

•Foreign currencies

Debt certificates and subordinated liabilities

Other liabilities

Equity

TOTAL LIABILITIES AND EQUITY

NET INTEREST INCOME/ATA

%of ATA %Yield/Cost %of ATA %Yield/Cost %of ATA %Yield/Cost%of ATA %Yield/Cost

3rd Quarter 09 2nd Quarter 09 1st Quarter 09 4th Quarter 08

3.8 1.02 3.5 1.34 3.0 2.15 2.9 2.98

25.8 2.88 25.1 3.15 24.2 3.38 23.7 3.43

4.6 2.14 4.8 3.62 5.3 2.86 6.0 3.42

60.2 5.09 60.9 5.78 61.5 6.40 60.9 7.29

40.9 3.68 41.0 4.41 41.3 5.16 40.0 6.11

36.2 3.82 36.4 4.44 36.4 5.38 36.6 6.08

4.7 2.64 4.7 4.16 4.9 3.54 3.4 6.46

19.3 8.07 19.8 8.62 20.2 8.94 21.0 9.53

5.7 0.37 5.8 0.51 6.0 0.36 6.5 0.71

100.0 3.97 100.0 4.56 100.0 4.99 100.0 5.59

14.1 2.16 13.1 3.35 13.4 4.01 14.9 4.59

46.1 1.29 45.5 1.72 44.8 2.46 45.8 3.46

21.6 0.85 21.0 1.22 21.0 1.94 21.0 3.06

15.8 1.06 15.5 1.53 16.4 2.15 16.0 2.87

5.8 0.27 5.5 0.35 4.7 1.23 5.0 3.70

24.5 1.67 24.4 2.14 23.7 2.92 24.8 3.79

21.7 2.12 22.6 2.59 23.4 3.57 22.1 4.24

12.5 0.75 13.5 0.80 13.4 0.69 12.3 1.29

5.7 - 5.4 - 5.1 - 5.0 -

100.0 1.45 100.0 1.91 100.0 2.57 100.0 3.36

2.52 2.65 2.42 2.23

Net interest income(Million euros)

(1) At constant exchange rate: +23.5%.

2,726 2,8293,0883,043

3,5863,272

200920081Q 3Q 4Q

+19.7% (1)

2Q 3Q1Q

8,599 10,292

2Q

3,434

9


area’s net interest income grew 3.9% year-on-year at

constant exchange rates.

In the United States net interest income for the first

nine months rose 2.6% in dollars, supported by

business volumes that are higher than a year earlier and

the work carried out on repricing.

Finally, net interest income in South America continues

to grow strongly (up 15.6% at constant exchange

rates), supported by the increase in customer funds, by

the high level of lending and especially by the

improvement in spreads.

Gross income

Net fee income contributed €3,267m in the first nine

months, which was 4.5% less than the same period last

year (1.9% less at constant exchange rates). It is still

affected by fees on mutual funds and pensions, which

fell 18.3% year-on-year. However fees on banking

services now exceed the level of a year earlier (up

0.9%) despite the slowdown in business.

Net trading income contributed €1,124m in the first

nine months, which is €295m less than the same

period last year because 2008 included €232m from

the VISA IPO.

Dividend income in the first nine months came to

€290m, compared to €402m in the same period last

year. The difference is due to Telefonica’s second

dividend (€133m), which was booked in the third

quarter last year whereas this year it will be booked in

the fourth quarter.

Income by the equity method comes to €6m for the

year to September. This is significantly lower than 2008

(€268m), which included among other €212m on sales

from the industrial holdings portfolio.

Finally, other operating income and expenses rose

28.9% to €399m thanks to the excellent performance

of income from insurance business, which increased

33.4% to €538m. This income offset charges to

deposit guarantee funds, which were up 32.4%

year-on-year, increasing faster than business. The

able to capitalise on a balance sheet with a limited

risk profile and limited leveraging.

In BBVA’s business with customers in the euro zone the

sharp decline in interest rates in recent quarters initially

had a positive effect because assets were repriced more

slowly than liabilities. However, now the reduction in

the yield on loans (down 73 basis points to 3.68%) is

greater than the decline in the cost of funds (down 37

basis points to 0.85%). Consequently the customer

spread has dropped to 2.83%, returning to the level

prior to the drastic decline in interest rates. Nevertheless

the risk profile is now lower because assets, such as the

consumer finance portfolio, have shrunk and liabilities,

in the form of liquid funds, have expanded. Net interest

income for the first nine months in Spain & Portugal

and in those Wholesale Banking units that operate in

the euro zone increased 4.5% year-on-year. Another

significant indicator is the ratio of net interest income to

average total assets, which remains stable in all the

Spanish units (retail businesses and CBB).

In Mexico interbank interest rates fell again in the third

quarter (the average TIIE was 4.9%, compared to

5.9% in the second quarter). This decline had an

impact on the cost of deposits, which dropped 47 basis

points. The lower interest rates were accompanied by a

change in the portfolio mix, with consumer products

and cards playing an increasingly smaller role. These

factors caused the yield on loans to lose 86 basis points

during the quarter. Therefore the customer spread

declined to 11.4%, compared to 11.8% in the second

quarter, even so, this is still high. Business volume

remained unchanged in the last 12 months and so the

Yield on totalnet lending

Customerspread

Cost ofdeposits

20091Q2Q 4Q 2Q

2008

Customer spread (euro area)(Percentage)

3Q

5.90

2.89

3.01

6.07

2.77

3.30

5.16

1.94

6.11

3.05

3.06

4.41

0.85

3Q

3.68

1.22

3.193.22

2.83

10


obtained by BBVA, beaten only by gross income in the

previous quarter. Compared to the same period last

year, it is €204m higher despite the absence for the

time being of the second Telefonica dividend. Therefore

gross income for the year to September came to

€15,378m, up 6.6% year-on-year (up 9.7% at constant

exchange rates).

Operating income

Operating costs remain under strict control, falling

3.9% year-on-year to €2,017m in the third quarter. In

the first nine months they rose 2.4% to €6,105m. The

reduction was particularly noticeable in the Spain &

Portugal Area, where costs fell 5.7% in the year to

date. The efforts made in the Americas were also

successful and operating costs for the first nine months

fell 0.9% at constant exchange rates.

ordinary contribution in the United States was higher

and it was also accompanied by an extraordinary

contribution of $28m for the Federal Deposit Insurance

Corporation (FDIC) in the second quarter of 2009.

As a result, gross income came to €4,998m in the

third quarter and this is the second highest amount ever

Operating costs, depreciation and efficiency(Million euros)

Jan.-Sep. 08 2008

PERSONNEL EXPENSES

Wages and salaries

Employee welfare expenses

Training expenses and other

GENERAL AND ADMINISTRATIVE EXPENSES

Premises

IT

Communications

Advertising and publicity

Corporate expenses

Other expenses

Levies and taxes

ADMINISTRATION COSTS

DEPRECIATION AND AMORTIZATION

OPERATING COSTS

GROSS INCOME

EFFICIENCY RATIO (Operating costs/gross income,%)

Jan.-Sep. 09

3,417 (3.1) 3,528 4,716

2,620 (2.8) 2,695 3,593

490 (6.6) 525 693

308 (0.3) 308 430

2,159 (2.4) 2,213 3,040

465 2.9 452 617

416 (4.6) 436 598

189 0.4 188 260

189 (5.0) 199 272

61 (27.0) 83 110

648 3.0 629 887

191 (15.0) 225 295

5,577 (2.9) 5,740 7,756

528 3.2 512 699

6,105 (2.4) 6,252 8,455

15,378 6.6 14,420 18,978

39.7 43.4 44.6

Δ%

Gross income(Million euros)

(1) At constant exchange rate: +9.7%,

4,772 4,854 4,5584,794 4,9984,889

200920081Q 3Q 4Q

+6.6% (1)

2Q 3Q1Q

14,420 15,378

2Q

5,491

The number of employees and branches continue to be

affected by cost contention plans with declines in all

business areas except the United States, due to the

addition of Guaranty Financial Group (Guaranty).

Thus, excluding Guaranty, at 30-Sep-09 the workforce

stood at 102,962, compared to 103,655 at 30-Jun-09;

the branch network stood at 7,390 compared to 7,458

at 30-Jun-09. Guaranty adds to the Group 1,761

employees and 164 branches.

Efficiency (measured by the cost/income ratio) was

39.7% in the third quarter, a considerable improvement

over 43.4% in the same period last year and thus

BBVA confirms its status as one of the most efficient

international banks.

The combined performance of revenues and costs

boosted the strength of operating income 10.6% to

€2,981m in the third quarter. This was also the second

highest amount ever obtained by BBVA. And the

amount for the first nine months rose 13.5%

year-on-year to €9,274m (up 18.1% at constant

exchange rates).

It is worth noting that all business areas contributed to

operating income, specifically: €3,463m in Spain &

Portugal, €1,015m in Wholesale Banking & Asset

Management (WB&AM), €2,564m in Mexico,

€657m in the United States and €1,684m in South

America.

11


29,070

30,022

34,535

13,371

28,506

28,414

32,573

13,295

29,887

30,918

36,066

13,774

112,621 108,972 104,723

Number of employees

September2008

December2008

September2009

Spain

Mexico

South America

The United States

Rest of the world

Operating costs(Million euros)

(1) At constant exchange rate: –1.0%.

2,084 2,069 2,2032,099 2,0172,070

200920081Q 3Q 4Q

–2.4% (1)

2Q 3Q1Q

6,252 6,105

2Q

2,017

Gross income variation 9M09/9M08

Operating costs variation 9M09/9M08

6.6

—2.4Jan.-Sep.

2008Jan.-Sep.

20092008

43.444.6

39.7

Efficiency(Percentages)

Efficiency ratio

Operating income(Million euros)


2,688 2,7842,355

2,6952,9812,819

3,474

200920081Q 3Q 4Q

+13.5% (1)

2Q 3Q1Q

8,167 9,274

2Q

3.375

1.574

2.052

3.147

1.497

1.987

3.547

1.576

2.050

7.971 7.787 7.554

653 641 778

Number of branches

September2008

December2008

September2009

Spain

Mexico

South America

The United States

Rest of the world

12



Net attributable profit in the first nine months came to

€5,950m, compared to €6,298m in the same period

last year. After deducting €1,418m for income tax, net

income comes to €4,532m. And after €353m for

minority interests, the Group’s net attributable profit

for the first nine months of 2009 fell 7.2% from the

€4,501m obtained in the same period of 2008 to

€4,179m (down 3.0% at constant exchange rates).

One-off operations in the first nine months of last year

(capital gains of Bradesco and provision for

early-retirements) added €180m after tax. Excluding

such operations, net attributable profit in the first nine

months of this year is down 3.3% (up 1.3% at

constant exchange rates).

All business areas contributed to the Group’s net

attributable profit in the first nine months: €1,877m in

Spain & Portugal, €770m in Wholesale Banking &

Asset Management, €1,101m in Mexico, €103m in the

United States and €689m in South America.

Earnings per share (EPS) in the year to 30-Sep-09 were

€1.12, which is similar to 2006 (just prior to the crisis).

This figure sets the BBVA Group apart from most other

banks, whose EPS have suffered drastically. Based on data

from the first half of 2009 BBVA is one of the top banks

in terms of its EPS, which is far above its peer average.

Impairment losses on financial assets (1)

(Million euros)

(1) In the third quarter of 2009, the capital gains coming from the sale and lease-back ofproperties which have been allotted to generic provisions for NPLs are not included.


200920081Q 3Q 4Q

557 607

859917

+37.2% (2)

2Q 3Q

911

1Q

816

2,082 2,856

2Q

1,029

Provisions and others

In the third quarter impairment losses on financial

assets include generic loan-loss provisions of €830m

that BBVA decided to set aside to strengthen its balance

sheet. This amount was generated by capital gains on

the sale and lease-back of real estate mentioned earlier.

Excluding this amount, impairment losses in the

quarter came to €911m and the cost of risk was

1.04% at 30-Sep-09. Both figures are in line with

previous quarters. For the year to September,

impairment losses on financial assets come to €3,686m

(€2,856m without the extraordinary provision

described above). Published results for the first half of

2009 show BBVA’s provisions are roughly 30% of

operating income whereas those of its European peers

are substantially higher, averaging 56%.

Net provisions in the first nine months came to

€234m. This is €360m less than the €594m provided

in the same period last year, which included €470m for

one-off early retirements.

Finally, other gains (losses) come to €597m for the first

nine months and include €830m of capital gains on the

sale and lease-back of property and provisions for

updating the value of real estate assets. In the same

period last year this item come to €805m, which

included €727m from the sale of BBVA’s interest in

Bradesco.

Net attributable profit (1)

(Million euros)

(1) Excluding results of one-off operations.(2) At constant exchange rate: +1.3%.

200920081Q 3Q 4Q

1,442 1,486

1,094

1,392

—3.3% (2)

2Q 3Q

1,380

1Q

1,238

4,321 4,179

2Q

1,561

among the top banks worldwide. Return on equity

(ROE) is 21.2%, the return on assets (ROA) is 1.11%

and the return on risk-weighted assets (RORWA) is

2.05%.

January-September2008

24.8

ROE (1)

(Percentage)

23.2 21.2

2008 January-September2009

(1) Excluding results of one-off operations.

Lastly, the various measures of profitability are stable

compared to previous quarters and they put BBVA

13


Earnings per share (1)

(Euros)




—3.3%


1.12 1.16 1.12

Earnings per share. BBVA and Peer Group (1)

(Year 2006=100)

2006

(1) Peer Group: Group of 15 comparable european banks.(2) Annualized.

2007 2008 1H09 (2)

BBVA

122

105

91

97

29

4

109

31

20

Median PeersAverage Peers

1.21

ROA (1)

(Percentage)

1.12 1.11



2008 January-September2009

14

3Q09

During the third quarter of 2009 the contraction that

started last year in the Spanish market continued,

especially in lending. The demand for time deposits fell

further but liquid forms of customer funds and pension

funds improved their behaviour. The decline in business

in the Americas, which started more recently, also

affected the growth of lending, which remains almost

at the same level as a year earlier. Conversely, customer

funds grew year-on-year in all regions. Consumer

finance and credit cards, with their associated risks,

now play a smaller role on the balance sheet whereas

items such as residential mortgages and public sector

lending have increased. Although lending fell in the

quarter, lower risk businesses were maintained and in

Business activity

Consolidated balance sheet(Million euros)

30-09-08 31-12-0830-06-09


Financial assets held for trading

Other financial assets designated at fair value through profit or loss

Available for sale financial assets

Loans and receivables

•Loans and advances to credit institutions

•Loans and advances to customers

•Other

Held-to-maturity investments

Investments in entities accounted for using the equity method

Tangible assets

Intangible assets

Other assets

TOTAL ASSETS

Financial liabilities held for trading

Other financial liabilities at fair value through profit or loss

Financial liabilities at amortised cost

•Deposits from central banks and credit institutions

•Deposits from customers

•Debt certificates

•Subordinated liabilities

•Other financial liabilities

Liabilities under insurance contracts

Other liabilities

TOTAL LIABILITIES

Minority interests

Valuation adjustments

Shareholders' funds

TOTAL EQUITY

TOTAL EQUITY AND LIABILITIES

MEMORANDUM ITEM:

Contingent liabilities

MEMORANDUM ITEM:

Average total assets

Average shareholders’ funds

Risks weighted assets

30-09-09

20,323 (1.8) 20,701 23,053 14,659

70,585 12.6 62,670 71,064 73,299

2,207 98.0 1,115 2,089 1,755

63,400 33.7 47,432 57,384 47,780

345,629 (5.2) 364,754 352,905 369,494

22,330 (19.3) 27,659 24,533 33,856

322,857 (4.1) 336,797 327,926 335,260

441 48.2 298 447 378

4,995 (4.9) 5,254 5,099 5,282

1,340 (0.5) 1,347 1,407 1,467

6,386 19.9 5,327 6,502 6,908

8,129 (2.9) 8,376 8,363 8,440

14,312 30.6 10,957 14,767 13,568

537,305 1.8 527,932 542,634 542,650

36,394 43.0 25,443 37,529 43,009

1,299 284.6 338 1,295 1,033

446,993 (1.1) 451,757 452,490 450,605

73,777 (17.3) 89,259 76,919 66,804

249,365 4.9 237,648 249,096 255,236

98,622 (3.4) 102,125 102,486 104,157

18,594 19.9 15,510 17,003 16,987

6,635 (8.0) 7,215 6,985 7,420

6,907 (8.1) 7,515 6,822 6,571

15,004 (3.5) 15,544 14,599 14,727

506,597 1.2 500,596 512,734 515,945

1,254 24.6 1,006 1,219 1,049

(543) 121.1 (246) (702) (930)

29,997 12.9 26,575 29,383 26,586

30,707 12.3 27,336 29,901 26,705

537,305 1.8 527,932 542,634 542,650

32,807 (13.7) 37,994 33,705 35,952

544,132 7.4 506,566 545,350 517,856

26,349 13.0 23,315 26,234 23,324

296,057 8.8 272,017 296,491 277,478

Δ%

15

3Q09 GROUP INFORMATIONBusiness activity

some cases even increased with established customers

and those with a high credit rating.

On 10-Sep-09 BBVA incorporated the business of

Guaranty Financial Group on its balance sheet. This bank

was acquired on 22-Aug-09 and it contributed (at market

value) $7,500m in loans and $11,400m in customer

funds. Because it is relatively small, the acquisition hardly

affects the year-on-year comparisons of the Group’s

balance sheet. Nonetheless, off-balance-sheet funds are

affected by the State takeover of the pension funds in

Argentina in the fourth quarter last year.

The end-of-period exchange rates have a negative

impact (just over three percentage points) on

year-on-year comparisons of the balance sheet and

business figures. In the last 12 months most currencies

with an impact on BBVA’s financial statements, such as

the Mexican peso and the US dollar, depreciated

against the euro. Comparisons for the main items based

on constant exchange rates are provided to facilitate

the assessment of business trends.

At 30-Sep-09 the Group’s total assets came to €537

billion, an increase of 1.8% compared to €528 billion

at the same date of last year (up 4.9% at constant

exchange rates). This item has been mostly stable since

the end of last year.

Lending to customers

At 30-Sep-09 the customer loan portfolio was down

4.0% to €331 billion (down 1.7% at constant

exchange rates) against 30-Sep-08.

Total lending (gross)(Billion euros)

September2007

September2008

September2009

–4.0% (1)

(1) At constant exchange rate: –1.7%.

311345 331

Total lending(Million euros)

30-06-09 31-12-08

Domestic sector

Public sector

Other domestic sectors

• Secured loans

• Commercial loans

• Financial leases

• Other term loans

• Credit card debtors

• Other demand and miscellaneous debtors

• Other financial assets

• Non performing loans

Non-domestic sector

Secured loans

Other loans

Non performing loans

TOTAL LENDING (GROSS)

Loan-loss provisions

TOTAL NET LENDING

30-09-09

204,997 (2.3) 209,769 207,490 210,080

20,247 20.5 16,807 19,219 17,599

184,750 (4.3) 192,961 188,271 192,481

106,761 (0.1) 106,908 106,615 105,832

6,192 (38.0) 9,981 6,724 9,543

6,862 (13.9) 7,970 7,087 7,702

49,122 (13.7) 56,904 51,213 55,448

1,776 4.2 1,704 1,831 1,971

2,996 (6.5) 3,205 4,156 3,474

2,648 8.8 2,435 2,849 3,029

8,391 117.7 3,855 7,797 5,483

126,008 (6.6) 134,872 128,118 132,591

41,690 3.3 40,362 40,046 39,390

80,579 (12.4) 91,961 84,420 90,326

3,739 46.7 2,550 3,652 2,875

331,005 (4.0) 344,641 335,608 342,671

(8,148) 3.9 (7,844) (7,682) (7,412)

322,857 (4.1) 336,797 327,926 335,260

Δ% 30-09-08

16

GROUP INFORMATION 3Q09Business activity

compared to €135 billion a year earlier (down 0.9% at

constant exchange rates). This item is partly affected by

the depreciation of Latin-American currencies and

especially by the slowdown in lending in Mexico, in the

United States and in some South American countries.

Customer funds

At the end of the third quarter total customer funds, on

and off the balance sheet, had increased to €500

billion. They are up 1.4%, compared to €493 billion a

year earlier (up 4.6% at constant exchange rates).

During the third quarter they rose more than €1

billion.

Total lending. Domestic sector (gross)(Billion euros)

September2007

September2008

September2009

—2.3%202 210 205

Lending to domestic customers in Spain increased

where the risk was lower. The public sector accounted

for €20 billion, which was a year-on-year increase of

20.5% and a rise of 5.3% during the quarter. The loan

portfolio of the domestic private sector stands at

€185 billion and secured loans account for the main

part of this. They came to €107 billion, which is

practically the same as a year earlier but slightly better

than the last quarter. Conversely, items of higher risk,

such as commercial lending are dropping fast (down

38.0% year-on-year and down 7.9%

quarter-on-quarter). There was good news on

non-performing loans in the domestic private sector.

At 30-Sep-09 they stood at €8,391m and continue to

slow on a quarter-by-quarter basis. In 2009 they

increased 25.7% in the first quarter, 13.2% in the

second and 7.6% in the third quarter. The reasons

behind the improvement are the lower additions to

NPA and the active debt recovery policy.

Lending to non-resident customers at the end of the

third quarter stood at €126 billion, a decrease of 6.6%

As usual in recent quarters, customer funds on the

balance sheet continued to outperform, rising 3.2%

to €367 billion, compared to €355 billion a year

earlier. Because of its ample liquidity, BBVA had no

need to enter price wars to capture customer funds,

more specifically time deposits. Moreover, this item is

slightly higher than the customer loan portfolio,

which highlights the Group’s good liquidity

positioning. Of the above amount, customer deposits

account for €249 billion (up 4.9% year-on-year),

marketable debt securities account for €99 billion

(down 3.4% year-on-year) and subordinate liabilities

account for €19 billion (up 19.9%).

Customer funds off the balance sheet came to €133

billion, a 3.1% decrease compared to €137 billion a

year earlier but up 2.3% during the quarter. The

51.0 52.1

Detail of total lending to domestic sector(gross) (Percentage)

September2007

50.9

September2008

September2009

Securedloans

Otherloans

49.0 47.949.1

137 133154

355 367340

Customer funds(Billion euros)

September2007

September2008

September2009

+1.4% (1)


493 493 500

Othercustomerfunds

Customerfunds onbalance sheet

17

3Q09 GROUP INFORMATIONBusiness activity

improvement since the end of the previous quarter is in

line with the rise in equity markets and the

corresponding increase in mutual funds and customer

portfolios. At constant exchange rates customer funds

are up 1.7% year-on-year (up 4.1% excluding

Consolidar AFJP balances). Spain accounted for €64

billion of customer funds, a rise of 2.7% in the latest

quarter. Customer funds in other countries came to

€69 billion, an increase of 4.7% at constant exchange

rates (up 9.7% after discounting the €3,796m

contributed by Consolidar AFJP in Argentina at

30-Sep-08).

In Spain, market uncertainty and low interest rates are

driving demand away from time deposits towards

liquid deposits and mutual funds with a low risk

profile. These factors, together with BBVA’s policy of

abstaining from aggressive campaigns to gather time

deposits, caused this item to drop 15.5% year-on-year

to €36 billion at the end of the third quarter.

However, current and savings accounts are up 6.8%

year-on-year to €45 billion. Mutual funds fell 8.8%

year-on-year to €34 billion but the entire system fell

12.4% and therefore BBVA again improved its market

share (up 77 basis points since 30-Sep-08 to 19.9%),

consolidating its leadership. Pension funds remain

higher compared to the first half of this year and the

third quarter last year. They now come to €17 billion

(up 3.8% quarter-on-quarter and up 5.3%

year-on-year).

In the non-resident customer segment in Spain the

aggregate of current and savings accounts, time

deposits, mutual funds and pension funds rose 8.0%

year-on-year to €201 billion. Current and savings

accounts performed well, rising 9.8% year-on-year to

€59 billion. This is particularly welcome because such

funds are associated with greater profitability.

Customer funds(Million euros)

30-09-08 30-06-09 31-12-08

CUSTOMER FUNDS ON BALANCE SHEET

DEPOSITS FROM CUSTOMERS

Domestic sector

Public sector

Other domestic sectors

• Current and savings accounts

• Time deposits

• Assets sold under repurchase agreement and other

Non-domestic sector

Current and savings accounts

Time deposits

Assets sold under repurchase agreement and other

DEBT CERTIFICATES

Mortgage bonds

Other debt certificates

SUBORDINATED LIABILITIES

OTHER CUSTOMER FUNDS

Mutual funds

Pension funds

Customer portfolio

TOTAL CUSTOMER FUNDS

30-09-09

366,581 3.2 355,283 368,586 376,380

249,365 4.9 237,648 249,096 255,236

98,112 (1.1) 99,182 97,133 104,959

4,908 (22.4) 6,321 4,080 6,328

93,204 0.4 92,861 93,052 98,630

45,115 6.8 42,243 47,748 44,589

36,193 (15.5) 42,841 37,240 43,829

11,896 53.0 7,778 8,064 10,213

151,253 9.2 138,466 151,964 150,277

59,094 9.8 53,835 57,486 56,930

86,202 13.3 76,066 88,799 85,647

5,958 (30.4) 8,565 5,679 7,700

98,622 (3.4) 102,125 102,486 104,157

38,750 (2.5) 39,740 38,780 39,673

59,872 (4.0) 62,385 63,706 64,484

18,594 19.9 15,510 17,003 16,987

133,115 (3.1) 137,371 130,082 119,017

47,713 (9.1) 52,480 47,552 46,295

59,224 3.2 57,366 56,895 48,140

26,177 (4.9) 27,525 25,636 24,582

499,695 1.4 492,654 498,668 495,397

Δ%

18

GROUP INFORMATION 3Q09Business activity

Statement of changes in equity

The total equity of the BBVA Group at 30-Sep-09

stands at €31 billion, rising 2.7% in the quarter. This

increase was almost entirely due to the net attributable

profit of €1,380m generated during the quarter and

after the deduction of the first and second interim

dividends approved by the Board of Directors on July

7th and September 29th respectively. Other items had

hardly any impact on the statement of changes in

BBVA’s equity.

Statement of changes in equity(Million euros)

BALANCE AT 30-06-09


Profit retained

Dividends

Shares issued

Treasury shares

Profit for the year

Other

BALANCE AT 30-09-09

THIRD QUARTER VARIATION

Capital Reserves Profit for the year

Treasuryshares

Valuationadjustments

Minorityinterests

Paid dividends

TOTALEQUITY

Other customer funds(Million euros)

30-09-08 31-12-0830-06-09

SPAIN

MUTUAL FUNDSMutual funds (ex real estate)• Guaranteed• Monetary and short-term fixed-income• Long-term fixed-income• Balanced• Equity• GlobalReal estate investment trustsPrivate equity funds

PENSION FUNDSIndividual pension plansCorporate pension funds

CUSTOMER PORTFOLIOS

REST OF THE WORLDMutual funds and investment companiesPension fundsCustomer portfolios

OTHER CUSTOMER FUNDS

30-09-09

63,889 (1.4) 64,824 62,224 61,628

33,974 (8.8) 37,236 34,179 34,900 32,367 (8.9) 35,511 32,556 33,197 14,595 (13.2) 16,809 15,952 16,507 12,964 0.5 12,906 12,140 12,016 1,224 (2.6) 1,256 1,061 1,252

762 (22.9) 987 709 755 2,039 (8.8) 2,236 1,802 1,657

784 (40.5) 1,317 891 1,009 1,499 (6.4) 1,602 1,515 1,580

108 (12.5) 123 108 123

16,951 5.3 16,093 16,323 16,078 9,856 7.0 9,208 9,482 9,358 7,095 3.1 6,885 6,842 6,720

12,964 12.8 11,494 11,721 10,650

69,225 (4.6) 72,548 67,858 57,406 13,739 (9.9) 15,244 13,373 11,395 42,273 2.4 41,273 40,571 32,079 13,213 (17.6) 16,031 13,914 13,932

133,115 (3.1) 137,371 130,082 119,034

1,837 24,762 2,799 (14) (702) 1,219 - 29,901

159 (19) 140

-

(42) (664) (706)

-

23 (135) (112)

1,380 110 1,490

8 2 (15) (5)

1,837 24,793 4,179 (148) (543) 1,254 (664) 30,707

- 31 1,380 (133) 159 34 (664) 807

Δ%

19

3Q09

Core capital(Million euros)

December2008

June2009

September2008

18,737 17,89820,758

March2009

19,286

September2009

23,355

At 30-Sep-09 the Group’s eligible capital base

calculated according to Basel II rules came to

€39,004m, which was €2,998m more than the

previous quarter. The two main factors behind this

growth were the profit generated in the period and a

€2,000m issue of mandatory convertible bonds.

Risk-weighted assets (RWA) have declined 1.1% since

30-Jun-09, to €290,521m. This is explained by the

lower level of lending and the depreciation of the

Mexican peso and the US dollar during the period.

Together, these factors exceeded the effect of the

Guaranty Financial Group acquisition, which

contributed $2,400m to RWA.

The minimum capital requirement (8% of RWA) is

therefore €23,242m and the capital base surplus is

€15,762m. In other words, the Group’s capital base is

68% higher than the required minimum (51% higher

at 30-Jun-09).

Capital base

Capital base (BIS II Regulation)(Million euros)

30-09-0831-12-0831-03-09

Shareholders' funds

Adjustments

Mandatory convertible bonds

CORE CAPITAL

Preference shares

Adjustments

CAPITAL (TIER I)

Subordinated debt and other

Deductions

OTHER ELIGIBLE CAPITAL (TIER II)

CAPITAL BASE

Minimum capital requirement (BIS II Regulation)

CAPITAL SURPLUS

RISK-WEIGHTED ASSETS

BIS RATIO (%)

CORE CAPITAL (%)

TIER I (%)

TIER II (%)

30-09-09

29,997 29,383 27,742 26,586 26,575

(8,642) (8,625) (8,456) (8,688) (7,838)

2,000

23,355 20,758 19,286 17,898 18,737

5,398 5,433 5,421 5,395 4,465

(1,527) (1,525) (1,532) (583) (514)

27,226 24,666 23,175 22,710 22,688

13,304 12,880 12,802 12,914 12,985

(1,527) (1,539) (1,543) (590) (520)

11,778 11,340 11,259 12,324 12,465

39,004 36,006 34,434 35,033 35,152

23,242 23,493 23,861 22,989 22,515

15,762 12,513 10,573 12,044 12,638

290,521 293,661 298,261 287,364 281,434

13.4 12.3 11.5 12.2 12.5

8.0 7.1 6.5 6.2 6.7

9.4 8.4 7.8 7.9 8.1

4.1 3.9 3.8 4.3 4.4

30-06-09

Core capital at the end of September stood at

€23,555m, rising 12.5% in the quarter. Core capital

grew more than RWA and so the core capital ratio, in

accordance with Basel II uniform criteria, came to

8.0% (7.1% at 30-Jun-09). There are two reasons for

the increase. First, the issue of mandatory

20

GROUP INFORMATION 3Q09Capital base

convertible bonds contributed 70 basis points. And

second, profit earned during the period provided a

further 20 basis points, and therefore, the accumulated

organic contribution year to date is 110 basis points

and already exceeds the level expected for the whole

year.

The TIER I ratio includes preference shares, a

deduction for financial participations greater than

10% and a deduction for insurance-company holdings

greater than 20% (these deductions are split equally

between Tier I and Tier II). After considering the

adjustments, the ratio rose one percentage point in the

quarter to 9.4% for the above reasons. Tier I capital

stands at €27,226m.

Capital base: BIS II ratio(Percentage)

Tier II

Core capital

Tier I

September2008

4.4

12.5

6.7

8.1

December2008

4.3

7.9

12.2

6.2

March2009

3.8

11.5

6.5

7.8

June2009

4.1

13.4

8.0

9.43.9

12.3

7.1

8.4

September2009

Core capital generationBIS II (Percentage)

Organic generation

6.2 0.3

8.00.20.6

0.7

December2008

1Q09 2Q09 3Q09 Convertiblebonds

September2009

Other eligible capital (TIER II), which mainly consists

of subordinated debt, eligible latent capital gains and

generic provisions in excess of the limits defined in the

rules, amounted to €11,778m and therefore the Tier II

ratio is 4.1%. This complementary capital rose 0.2%

during the quarter owing mainly to increases in

loan-loss provisions and eligible latent capital gains.

As a result, the BIS ratio at the end of September 2009

was 13.4%, an increase of 1.1% compared to the end

of the previous quarter.

Ratings

BBVA remains one of the financial entities with

superior ratings.

Ratings

Moody’s

Fitch

Standard & Poor’s

Short termLong term Financial strength Outlook

Aa2 P-1 B- Negative

AA- F-1+ A/B Positive

AA A-1+ - Negative

21

3Q09

30-9-08 31-12-08 30-9-09

EuropeStoxx Banks

BBVA

31-3-09

Share price index(30-09-08 = 100)

Stoxx 50

20

60

80

90

120

70

30

100

50

40

110

30-6-09

During the third quarter of 2009 stock markets

continued the upward trend that started in March.

Macroeconomic conditions are still bad but signs of

stabilisation have emerged, allowing the market to

reflect greater positive sentiment. However, while

central banks await clearer signs of economic

recovery, official interest rates remain unchanged at

minimum levels in Europe and the United States.

During the quarter the banking sector was favoured

by a significant improvement in market sentiment.

Earnings in the first half were a positive factor

supporting this. The need for banks to maintain

higher levels of capital continued to be debated in

international forums such as the G20 meeting where

participants called for co-ordinated measures by

governments and regulators. Such measures, whether

they entail capital or liquidity requirements or tighter

supervision, could determine the future of some

banks. Nonetheless the gradual improvement in

market liquidity has provided banks with more

options when it comes to obtaining finance.

In the above environment the main stock markets

closed the quarter with substantial gains, extending the

rally that started in the second quarter. In general,

European indices out performed American ones. The

Stoxx50 rose 16.9% and the UK’s FTSE climbed

21.3%, both beating the S&P 500, which increased

15.0%. In Spain the Ibex35 gained 20.1% in the

quarter, outperforming the Stoxx50 and S&P 500. The

relative performance for the first nine months was

even better: the Ibex increased 27.8%, compared to

17.8% for the Stoxx50 and 17.0% for the S&P 500.

During the third quarter the main banking sector

indices also outpaced the broader market. Based on

the general indices, European markets –especially

Britain– rose faster than those in America. The

European Stoxx Banks improved 32.2%, which was

slightly less than the FTSE Banks (up 39.2%) but

significantly higher than the S&P Financials Index (up

25.1%) and US regional bank index (up 30.3%).

The superior performance of the banking sector in the

third quarter can be explained, at least partially, by the

earnings in the first half. In previous quarters investors

and analysts paid greater attention to capital adequacy

and balance sheets. However their interests now

appear to turn once again to the potential generation

of revenues and profit.

In BBVA’s case, earnings in the first half were higher

than analysts’ expectations. In particular they took a

positive view of revenues and net interest income as

well as the cost reductions. The Group’s proven ability

to generate capital in an organic manner was especially

noted owing to concerns regarding the capital

adequacy of the financial system.

The BBVA share

22

GROUP INFORMATION 3Q09The BBVA share

Market capitalisation(Million euros)

September2008

December2008

September2009

+40.1%42,952

32,457

45,463

BBVA’s good results boosted its share price 18.4%

between the date they were published and 30-Sep-09.

For the entire third quarter BBVA’s shares rose 35.7%,

outpacing the positive performance of the main

reference indices in Spain and the rest of Europe. For

the first nine months BBVA’s shares are up 40.1%,

which compares favourably with the Stoxx50 (up

17.8%) and the Ibex35 (up 27.8%). During the third

quarter the share price varied between €8.51 and

€12.83, closing at €12.13 on 30-Sep-09 and bringing

market capitalisation to €45,463m. At that point the

price-to-earnings ratio (P/E), calculated on 2009

profits as estimated by analysts, is 9.1 compared to 6.5

in 2008 (calculated on the actual figures at the end of

that year). BBVA trades at a significant discount (35%)

compared to the European banking sector in terms of

P/E and therefore its current price is relatively

attractive. At the end of September 2009 the P/E of the

Stoxx Banks Index was 14.1. The price-to-book value

multiple is 1.5 compared to 1.2 at the end of 2008 and

the price-to-net-tangible-book multiple has risen to

2.0. Lastly, the dividend yield (calculated on average

dividends estimated by analysts for 2009) is 3.3%.

In the third quarter of 2009 BBVA’s shares continued

to enjoy high liquidity and the average number of

shares traded each day was 51 million, an increase

compared to the previous quarter. The daily average

value traded was also higher (€535m).

The Group maintains its customary calendar in respect

of shareholder remuneration. A second interim

dividend of €0.09 per share in cash was paid against

2009 earnings on 12-Oct-09. This equates to a

disbursement of €337m at a time when most banks

have cancelled such payments.

The BBVA share

Number of shareholders

Number of shares issued

Quarter daily average number of shares traded

Quarter daily average trading (million euros)

Maximum price in the quarter (euros)

Minimum price in the quarter (euros)

Closing price for the quarter (euros)

Book value per share (euros)

Tangible book value per share (euros) (1)

Market capitalisation (million euros)

(1) Net of goodwill.

896,433 923,005 919,195 903,897 886,950

3,747,969,121 3,747,969,121 3,747,969,121 3,747,969,121 3,747,969,121

50,638,534 48,989,582 58,814,357 61,864,657 55,663,963

535 399 399 579 644

12.83 9.10 9.33 12.35 12.58

8.51 5.88 4.45 7.04 10.18

12.13 8.94 6.11 8.66 11.46

8.00 7.84 7.40 7.09 7.09

6.17 5.88 5.36 5.02 5.22

45,463 33,507 22,900 32,457 42,952

30-09-0831-03-09 31-12-0830-06-0930-09-09

Share performance ratios

Price/Book value (times)

Price/Tangible book value (times) (1)

PER (Price/Earnings; times) (2)

Yield (Dividend/Price; %) (3)

(1) Net of goodwill.(2) The 30-9-09 P/E is calculated taking into consideration the median of the analysts' estimates (October 2009).(3) Dividend yield at 30-9-09 is calculated taking into consideration the median of analysts' estimates (October 2009).

1.5 1.1 0.8 1.2 1.6

2.0 1.5 1.1 1.7 2.2

9.1 7.3 4.8 6.5 8.6

3.3 4.0 6.1 7.1 5.4

31-03-09 31-12-08 30-09-0830-06-0930-09-09

23

3Q09

Credit risk

The Group has continued to conserve high asset quality,

based on its policies of prudent management for its

most relevant risks and an in-depth knowledge of its

lending portfolios (practically all of which have been

generated through the Group’s own networks). Thus,

once more, this quarter brought good news on risk

management. The main highlights were the following:

For the third quarter running, net entries into NPAs

decreased, indicating a trend due both to fewer gross

entries and to the high volume of recoveries. This

improvement has dampened growth in the NPA

ratio. The trend is even more significant given that it

has occurred in a context of very selective real-estate

purchases.

It was decided to employ 100% of the capital gains

from the sale and lease-back of properties in Spain,

ie, €830m, to endow generic provisions, thus

boosting the coverage ratio.

Moreover, there is still ample coverage from

provisions and collaterals.

The Group has managed to consistently outperform the

system as a whole, with better cost of risk and better

NPA and coverage ratios. Additionally, with the latest

endowment to provisions in Spain, the Group has

helped to maintain the recurrent nature of its earnings

for the next few quarters, despite current uncertainty

regarding economic recovery.

The third-quarter data show that to 30th September

2009, BBVA has:

A volume of total risk with customers (including

contingent risks), at €363,812m, which is just 1.5%

lower than the €369,313m reported on 30-Jun-09,

and in line with the overall slowdown in lending

activity. It is impacted by the depreciation of the

main currencies in which the Group operates, that

are consolidated to its balance sheet in euros.

Moreover, this quarter, the percentage of the lending

segments bearing lower risk continued to increase,

Risk management

Risk and economic capital management

Credit risk management(Million euros)

31-03-09 31-12-08 30-09-08

TOTAL RISK EXPOSURE (1)

Non-performing assets

Total risks

Provisions

•Specific

•Generic and country-risk

NPA ratio (%)

NPA coverage ratio (%)

MEMORANDUM ITEM:

Foreclosed assets

Foreclosed asset provisions

Coverage (%)

(1) Including contingent liabilities.

30-09-09

12,500 11,774 10,543 8,568 6,544

363,812 369,313 374,962 378,635 382,635

8,459 8,023 8,000 7,841 8,328

4,422 4,132 3,679 3,282 2,524

4,037 3,891 4,321 4,558 5,804

3.4 3.2 2.8 2.3 1.7

68 68 76 92 127

698 546 461 391 383

151 123 108 98 100

22 22 23 25 26

30-06-09

24

RISK AND ECONOMIC CAPITAL MANAGEMENT 3Q09Risk management

mainly residential mortgages and credit lines for

corporations and institutions.

Non-performing assets of €12,500m. These have

also grown more slowly this quarter: 6.2%, as

compared with 11.7% last quarter and 23.0% in the

first quarter of 2009. This is due to an improvement

in the gross entries into NPAs, which went down

3.9% over the quarter, and also to the active

recoveries policy. The ratio of recoveries to entries in

NPAs was 45.1%, as compared with 44.4% and

32.4% in the two preceding quarters.

An NPA ratio of 3.4%, one of the lowest amongst all

its European peers. In Spain and Portugal, this ratio

was 4.0%, below the average for the system

according to the latest data published to August

2009. Bancomer, in Mexico, reported an NPA ratio

of 4.0%, its quarterly growth slowing down

significantly (up 11 basis points as compared with a

rise of 35 in 2Q09 against 1Q09). In the United

States the NPA ratio was 3.9%, compared with the

NPA ratio(Percentage)

September2008

1.7

2.8

3.4

March2009

September2009

December2008

June2009

2.3

3.2

Variations in non-performing assets (Million euros)

3Q084Q081Q09

BEGINNING BALANCE

Entries

Outflows

Net variation

Write-offs

Exchange rate differences and other

PERIOD-END BALANCE

MEMORANDUM ITEM:

•Non-performing loans

•Non-performing contingent liabilities

3Q09

11,774 10,543 8,568 6,544 4,720

3,573 3,717 3,787 4,265 3,137

(1,611) (1,650) (1,228) (1,264) (875)

1,962 2,067 2,559 3,001 2,262

(1,088) (819) (686) (787) (529)

(148) (17) 102 (190) 91

12,500 11,774 10,543 8,568 6,544

12,189 11,509 10,262 8,437 6,483

311 265 281 131 61

2Q09

Net additions to NPA(Million euros)

December2008

June2009

September2008

2,262

3,001

2,067

March2009

2,559

September2009

1,962

September2008

March2009

September2009

December2008

June2009

Recoveries over entries to NPA(Percentage)

27.932.4

45.1

29.6

44.4

25

3Q09 RISK AND ECONOMIC CAPITAL MANAGEMENTRisk management

4.5% figure of the previous quarter, having dropped

56 basis points, owed mainly to the addition of

Guaranty. Finally, in South America, the NPA ratio

flattened out at 2.8%, very close to the 2.6%

reported three months earlier.

Highly selective purchases of distressed assets,

accounting for €104m over the third quarter, in

comparison with €178m in the second quarter and

€490m in the first quarter of 2009.

Coverage provisions for customer risks of €8,459m,

which were 5.4% higher than the June 2009 figure.

Of this amount, generic provisions and country-risk

provisions plus substandard provisions (€4,037m)

represented 47.7% of the total.

And a coverage ratio that the Group has maintained

at 68%. By business area, Spain & Portugal brought

its coverage up to 59%, Wholesale Banking & Asset

Management had a ratio of 118%, Mexico 135%

and United States 43%, while in South America,

coverage was 127%.

Non-performing assets are covered by an adequate

amount of collateral. Including the value of the

collateral securing non-performing assets, ie,

€12,607m, the overall coverage ratio rises to 169%.

This is 5 percentage points higher than in June 2009.

The value of the collateral is 190% of the balance of

secured non-performing loans, and the coverage

provisions represent 144% of the unsecured

non-performing loans. Both figures are higher than

those published to 30th June 2009.

Market risk

The Group’s average exposure to market risk was

€24m in the third quarter (referenced to VaR without

exponential flattening). This was 5.4% down on the

figure reported for the previous quarter. The first

symptoms that the economic slowdown was bottoming

out have prevented further cuts to base rates, both in

Europe and America, and alternative measures have

been intensified to stimulate activity. South America

Global Markets is the unit that has made the biggest

contribution to this lower market-risk profile, mainly

due to the significant exposure drop in Peru and Chile.

Average market risk in Europe Global Markets

remained flat, and increased in Mexico. At the

quarter-end, the risk was €26m, having peaked at a

quarterly figure of €28m on 4th August.

0

10

20

30

30-9-08 31-3-09 30-9-0931-12-08 30-6-09

Trends in market risk (1)

(VaR, million euros)

(1) On 29-2-08 the Bank of Spain approved the Algorithmic internal model for the European and Mexican tradingportfolios. The methodology applied for the VaR metric in these businesses is the historical simulation.

40

Coverage including provisions andcollaterals (Million euros)

+190%

12,607

Value ofcollaterals

6,620

NPAs

+144%

8,459

Provisions

5,880

NPAs

Secured Non secured

September2008

March2009

September2009

December2008

June2009

NPA coverage ratio(Percentage)

127

76 6892

68

26

RISK AND ECONOMIC CAPITAL MANAGEMENT 3Q09Risk management

Market risk is concentrated in the different

geographical areas where the bank operates. The

percentage in Europe and United States rose slightly, to

60% of total average exposure in the third quarter. The

banks in South America reduced their relative share of

exposure by seven percentage points to 16%.

The Group’s trading portfolio bears different types of

market risk. At 30-Sept-09 the biggest exposure was to

interest-rate risk and lending-spread risk. However,

these accounted for a smaller percentage than in the

previous quarter. The relative weight of exchange-rate

risk was halved. Equity and volatility risks, meanwhile,

increased their relative weight.

Economic capital

Attributable ERC consumption (economic risk capital)

reached €21,906m at the end of September, up 1.1%

against June 2009.

Most of this figure (63.0%) reflects credit risk from

lending originated through the Group’s own networks

from its customer base. This credit risk has increased

slightly over the quarter, due to new estimations of

parameters, restated to include the impact of increased

numbers of loans entering into arrears from the

loan-books, reflecting the deterioration of the economy

as a whole.

Operational risk (8.4%) also showed a slight increase

due to the effect of updating the data bases of

operational events in the back-book.

Market risk (3.9%) is the smallest part of total

exposure, because of the nature of BBVA’s business and

its policies, which scarcely involve any proprietary

trading. Meanwhile, holding risk (7.6%) mainly reflects

the portfolio of Holdings in Industrial & Financial

Companies and the Group’s stake in CITIC. The

structural balance-sheet risk (9.0%) originates from the

management of structural risk in interest and exchange

rates, both stemming from the Group’s activity in the

various countries where it operates. The ERC for risks

related to market variables (market risks, holding risks

and structural balance-sheet risks) went down by 6.2%

over the third quarter.

BBVA Group economic risk capital.Distribution by risk type(Data in attributable terms, 30-09-09)

Spain and Portugal

Wholesale Banking &Asset Management

The United States

South America

Market 3.9%

Structural(balancesheet) 9.0%

Holdings7.6%

Operational8.4%

Mexico

47%

15%

14%

10%

14%

Other 8.1%

Lending 63.0%

Market risk by risk factors (Third Quarter 2009. Million euros)

Risk

Interest + credit spread

Exchange rate

Equity

Vega and correlation

Diversification effect

TOTAL

AVERAGE

MAXIMUM

MINIMUM

30-09-09

,

27.2

2.7

3.0

16.8

(23.7)

26.1

23.9

28.3

18.2

27

3Q09

Economic profit and risk-adjusted return on economic capital

The figures for economic profit and risk-adjusted

return on capital (RAROC) form part of the

fundamental metrics that BBVA needs for a correct

implementation of its value-based management

system.

Calculations are based on the adjusted profit, which is

obtained by making adjustments to the net attributable

profit: substituting generic provisions with an

allocation based on expected losses; accounting the

changes in unrealised capital gains on the holding

portfolios; applying the difference between all the

accounting positions of Global Markets and their

market value; and reflecting changes in the total net-

asset value due to exchange-rate variations on holdings

in Group companies. In the first nine months of 2009,

these adjustments increased €845m the earnings,

mainly due to the adjustment for unrealised capital

gains (the adjustment was negative in the same period

of 2008). Adjusted profit thus stood at €5,024m.

The medium- and long-term performance of these

calculations is very useful for determining the intrinsic

value of a business. However, in the short term they

can be hit by market volatility. That is why recurrent

data becomes so relevant. As these mainly come from

customer business, the metrics genuinely reflect the

Group’s management performance. They are obtained

by excluding the earnings of units impacted by changes

in capital gains on portfolio investments; and with

respect to expected losses, including the loss adjusted to

cycle. Such recurrent adjusted profit stood at €3,924m

in the first nine months of 2009.

From the adjusted profit a subtraction is made which

comes from multiplying the average economic risk

capital or ERC for the period (€22,051m at 30-9-09)

by the percentage cost of capital. The cost of capital is

different for each of the Group’s business areas and

units. Based on information extracted from the

analysts’ consensus, it is equivalent to the rate of return

the market is demanding on investment capital.

The economic profit is thus calculated. It amounted to

€3,176m for the first nine months, and the recurrent

economic profit stood at €2,431m, once more

reflecting the degree to which BBVA’s profits exceed the

cost of capital employed.

The RARoC figure measures the return earned by the

business, adjusted to risks borne. Comparing the

adjusted profit against the average economic risk capital

(ERC) for the period gives the BBVA Group a RARoC

of 30.5%, while its recurrent RARoC was 28.6%.

Economic profit and risk adjusted return on economic capital(Million euros)

Jan.-Sep. 08


Adjustments

ADJUSTED NET ATTRIBUTABLE PROFIT (A)

Average economic risk capital (ERC) (B)

RISK-ADJUSTED RETURN ON ECONOMIC CAPITAL (RAROC) = (A)/(B) * 100 (1)

RECURRENT RAROC (%) (1)

ERC x cost of capital (C)

ECONOMIC PROFIT (EP) = (A) - (C)

RECURRENT ECONOMIC PROFIT

(1) Percentage annualized.

Jan.-Sep. 09

4,179 (7.2) 4,501

845 n.m. (2,176)

5,024 116.2 2,324

22,051 14.8 19,201

30.5 16.2

28.6 33.2

1,848 23.7 1,494

3,176 282.5 830

2,431 (16.0) 2,894

Δ%

28

3Q09

Aggregating information by areas is a fundamental

management tool for the various business that together

form the BBVA Group. In this section we discuss the

more significant aspects of the activities and earnings of

the Group’s five business areas, along with those of the

main units within each, plus Corporate Activities. We

focus on their income statements, balance sheets and a

set of relevant management indicators, namely, lending,

deposits, off-balance-sheet funds, ROE, cost-income

ratio, non-performing assets and coverage. The areas

are structured as follows:

Spain and Portugal

Wholesale Banking & Asset Management:

• Corporate and Investment Banking.

• Global Markets.

Mexico:

• Banking business.

• Pensions and Insurance.

The United States

South America:

• Banking businesses.

• Pensions and Insurance.

Which in turn comprise:

Spain and Portugal: This includes the Spanish retail

branch network (individual customers, high net-

worth individuals and small companies and

businesses in the domestic market); the business &

corporate banking unit (SMEs, large companies,

institutions and developers in the domestic market);

and the remaining units, in particular, consumer

finance, insurance business and BBVA Portugal.

Wholesale Banking & Asset Management: This

consists of corporate and investment banking

(including the activities of the European, Asian and

New York offices with large corporate and business

customers); global markets (trading floor business and

distribution in Europe, Asia and New York); asset

management (mutual and pension funds in Spain, and

hedge funds); the Group’s own long maturing equity

portfolios and private equity activities (Valanza

S.C.R); and Asia (through the Group’s holding in the

Citic group). Wholesale Banking & Asset

Management also operates in these businesses in

Mexico and South America. However, this report

covers its activities and earnings in those regions

under the umbrella of the business areas there.

Mexico: This area operates the banking, insurance

and pension businesses in Mexico.

The United States: This area operates the banking

and insurance business in the United States and in the

Associate State Puerto Rico.

South America: This area operates the banking,

insurance and pension businesses in South America.

Apart from the above units, all business areas have a

residual compartment in which to place its other

businesses as well as eliminations and unallocated items.

Finally, the Corporate Activities area handles the

Group’s general management functions. These mainly

consist of structural positions for interest rates

associated with the euro balance sheet and exchange

rates, together with liquidity and shareholders’ funds.

The management of structural risks related to interest

rates in currencies other than the euro is handled by the

corresponding areas. This area also includes the Group’s

industrial portfolio management unit and financial

shareholdings, along with its non-international real-

estate business.

BBVA has maintained the criteria it applied in 2008 to

the composition of the business areas very much the

same for 2009, with only a few insignificant changes.

These do not affect the Group-level information and

their impact on the figures for the different business

units and areas is practically irrelevant. Nonetheless, the

2008 data have been reformatted to include these

marginal changes to ensure like-for-like comparison. As

usual, in the case of units in the Americas, we provide

the year-on-year percentage changes calculated at

constant exchange rates as well as at current rates.

The breakdown by business area starts at the lowest-

level units, where all the initial accounting data for the

business in question are collected. Management groups

the data from these units in a predefined manner to

arrive at the picture for the main units and, finally, for

the business areas themselves. The Group’s subsidiaries

are also assigned to particular business areas according

to their activity.

Once the composition of each business area has been

defined, certain management criteria are applied. The

most relevant are the following:

Business areas

29

3Q09 BUSINESS AREAS

Capital: the Group allocates economic risk capital

(ERC) commensurate with the risks incurred by each

business. This is based on the concept of unexpected

loss at a certain level of statistical confidence,

depending on the Group’s solvency targets. These

targets have two levels: the first is core equity, which

determines the allocated capital. The Bank uses this

amount as a basis for calculating the return generated

on the equity in each business (ROE). The second

level is total capital, which determines the additional

allocation in terms of subordinate debt and preference

shares. The ERC calculation combines lending risk,

market risk, and structural risk associated with the

balance sheet and equity positions, operational risk

and fixed-asset risks, and technical risks in the case of

insurance companies. These are calculated using

internal models defined according to the guidelines

and requirements of the Basel 2 Accord, such that

economic criteria prevail over normative criteria.

As ERC is risk-sensitive, it is linked to the

management policies of individual businesses,

providing an equitable basis for assigning capital to

each business in keeping with the risks incurred and

making it easier to compare profitability across units.

Thus, the economic risk capital is calculated on a

standard basis that is applicable to all kinds of risk

and any risk transaction, position or balance. This

makes it possible to assess risk-adjusted returns and

work out an aggregate profitability per customer,

product, segment, business area or unit.

Internal transfer prices: the Bank uses rates adjusted

for maturity to calculate the net interest income for

each business. It also examines the interest rates for

the different assets and liabilities that make up each

unit’s balance sheet. In cases where there are revenue-

generating units as well as distribution units (eg, asset

management products), it divides the earnings at

market prices.

Assignment of operating expenses: the Bank assigns

direct and indirect costs to business areas except

where there is no closely defined relationship, ie,

when they are of a clearly corporate or institutional

nature for the entire Group.

Cross-selling: in some cases consolidation

adjustments are required to eliminate duplicate

accounting entries caused when earnings are booked

to two or more units with the aim of encouraging

cross-selling to straddle business boundaries.

Operating income and net attributable profit by business area(Million euros)

Spain and Portugal

Wholesale Banking & Asset Management

Mexico

The United States

South America

Corporate Activities

BBVA GROUP

BBVA GROUP EXCLUDING ONE-OFFS

3,463 3.4 3.4 3,348 1,877 (2.1) (2.1) 1,916

1,015 (9.1) (9.1) 1,116 770 3.7 3.7 742

2,564 (8.0) 7.1 2,788 1,101 (28.1) (16.2) 1,531

657 26.7 13.8 519 103 (44.1) (49.8) 184

1,684 33.9 31.7 1,258 689 27.8 27.5 539

(109) (87.4) (87.4) (861) (361) (12.6) (12.6) (413)

9,274 13.5 18.1 8,167 4,179 (7.2) (3.0) 4,501

9,274 13.5 18.1 8,167 4,179 (3.3) 1.3 4,321


Jan.-Sep. 08Jan.-Sep. 09

Operating income




Recurrent economic profit bybusiness area(January-September 2009. Million euros)

Spain and Portugal


Mexico

The United States

South America


BBVA GROUP

1,749 1,217

673 381

1,391 1,139

266 72

652 437

(808) (815)

3,924 2,431

Adjusted netattributable profit

Economic profit (EP)

30

3Q09

Spain and Portugal

Income statement(Million euros)

Jan.-Sep. 08

NET INTEREST INCOME


Net trading income

Other income/expenses

GROSS INCOME

Operating costs

Personnel expenses



OPERATING INCOME

Impairment on financial assets (net) (1)

Provisions (net) and other gains/losses (1)

INCOME BEFORE TAX

Income tax

NET INCOME

Minority interests


(1) The third quarter of 2009 includes €830 million of capital gains on the sale and lease-back of properties and generic loan-loss provisions for identical amount.

Jan.-Sep. 09

,

3,693 4.1 3,547

1,123 (8.0) 1,222

153 (25.5) 206

324 2.6 316

5,293 0.1 5,290

(1,831) (5.7) (1,942)

(1,132) (7.1) (1,219)

(620) (3.5) (642)

(79) (2.6) (81)

3,463 3.4 3,348

(1,595) 163.0 (607)

804 n.m. 8

2,672 (2.9) 2,750

(795) (4.7) (834)

1,877 (2.1) 1,916

- (18.4) -

1,877 (2.1) 1,916

Δ%

Balance sheet (Million euros)

30-09-08


Financial assets



•Loans and advances to credit institutions and other

Inter-area positions

Tangible assets

Other assets

TOTAL ASSETS/LIABILITIES AND EQUITY



Debt certificates

Subordinated liabilities



Other liabilities

Economic capital allocated

30-09-09

,

2,388 (1.0) 2,412

10,727 (2.4) 10,985

201,721 (1.3) 204,422

200,378 (1.2) 202,838

1,343 (15.2) 1,584

- - -

1,304 (4.9) 1,371

1,218 (27.0) 1,667

217,358 (1.6) 220,858

854 (66.0) 2,513

93,303 (1.0) 94,259

312 (94.9) 6,097

4,384 6.8 4,105

96,106 6.1 90,595

260 68.6 154

14,362 (9.4) 15,852

7,776 6.8 7,281

Δ%

31

3Q09 BUSINESS AREASSpain and Portugal

The Spain & Portugal Area provides a distinctly

different and innovative approach to banking through

specialised branch networks where the customer is the

prime focus of business. It handles the financial and

non-financial needs of individual customers (Spanish

Retail Network) including the upper-middle market

segment (BBVA Patrimonios). SMEs, large companies,

and public and private institutions are managed by the

Corporate & Business Banking Unit (CBB). Other

specialised units handle consumer finance and internet

banking (the Consumer Finance Unit), the bancassurance

business (BBVA Seguros) and BBVA Portugal.

In the third quarter of 2009 activity in the domestic

market continued to be lopsided. Lending is slowing

whereas fund gathering is buoyant, reflecting the record

savings rate of the Spanish public. Furthermore lower

interest rates have led to greater demand for liquid

deposits, bonds and the more conservative types of

collective investment.

In this context, the area continued to apply its

particular model of retail management. This entails

customer focus, an extensive commitment to society, a

high level of efficiency and risk control. And it had an

effect on the stability of the third quarter, particularly

on the area’s earnings and on efficiency. The

cost/income ratio stands at 34.6%, practically the same

as the excellent level recorded in the first half

(compared to 36.7% in the same period last year). The

gross entries to non-performing assets have stabilised

and the NPA ratio has slowed down its growth and is

now 4.0%. The coverage ratio (59%) has been

strengthened by adding €830m to generic loan-loss

provisions.

At 30-Sep-09 the area’s loan portfolio stands at

€205,495m (€206,750m a year earlier). Market share

in the household segment increased to 12.0% (11.9% at

Spain and Portugal. Operating income(Million euros)

1,0741,132

1,1391,143 1,1281,135

1,201

200920081Q 3Q 4Q

+3.4%

2Q 3Q1Q

3,3483,463

2Q

Spain and Portugal. Net attributable profit(Million euros)

673619 649624 606

657

200920081Q 3Q 4Q

—2.1%

2Q 3Q1Q

1,916 1,877

2Q

613

Relevant business indicators (Million euros and percentages)

30-09-08

Customer lending (gross)

Customer deposits (1)

Off-balance-sheet funds

•Mutual funds

•Pension funds

Other placements

Customer portfolios

ROE (%)

Efficiency ratio (%)

NPA ratio (%)

Coverage ratio (%)

(1) Including collection accounts and individual annuities.

30-09-09

,

205,495 (0.6) 206,750

94,064 (1.8) 95,751

41,026 (7.7) 44,472

30,868 (11.9) 35,028

10,158 7.6 9,444

8,268 59.0 5,200

12,964 12.8 11,494

34.6 35.5

34.6 36.7

4.0 1.9

59 97

Δ%

Spain and Portugal highlights in thethird quarter

• Stable revenues and cost containment.

• Stabilisation of gross entries to NPA.

• Higher market share in liquid customer funds (fromindividuals) and mutual funds.

• Leadership in the SME and large company segments(FRS Report).

32

BUSINESS AREAS 3Q09Spain and Portugal

31-Dec-08) and the area reduced its positions in

high-risk sectors. In the household segment demand is

high for products such as two novel mortgages (Ven a

Casa and Hipoteca Solución) that offer competitive

advantages compared to similar offers in the market. In

the companies segment, BBVA maintains its leadership

in the SME and large companies segments, according to

the FRS survey. Furthermore, BBVA confirmed its

leadership in the public sector, increasing finance to the

authorities by 20.0% and taking a prominent position

in big operations.

Customer funds under management stand at

€143,292m, down 1.4% against 30-Sep-08. The area

consolidated and increased its market share in private

individual deposits (10.1%) and in mutual funds

(19.9%); they rose 18 and 77 basis points from August

and from September 2008 respectively. BBVA has

successfully managed the surge in demand for liquid

deposits, which rose 7.4% to €41,716m year-on-year.

Nonetheless, time deposits were less buoyant, owing to

the sharp decline in interest rates. BBVA also continues

to lead the market in mutual funds. At 30-Sep-09 the

area managed assets of €30,868m. Pension funds were

up 7.6% year-on-year to €10,158m, partly due to

pension funds captured from the competition. Lastly,

the balance of stable customer funds increased €2,000m

in the quarter when BBVA’s issue of convertible bonds

was subscribed in only five days.

Thanks to pricing policies and a change in the deposit

mix (with current and savings accounts playing a bigger

role), net interest income for the first nine months rose

4.1%. This was achieved despite falling GDP and the

related contraction in credit. In terms of average total

assets the area’s yield is highly positive, standing at

2.23% in the first nine months (2.13% for the same

period last year). Net fee income fell by the same

percentage as the first half (down 8.0% year-on-year).

This was the result of lower mutual and pension fund

business although these declines were partially offset by

higher contributions from insurance business (up 6.0%)

and by the increase in banking services (up 4.0%).

Gross income reached almost the same level as last year.

In the first nine months, operating costs fell 5.7%

year-on-year thanks to transformation plans applied in

recent years. This helped operating income to rise 3.4%

to €3,463m. As in previous quarters, only 22.1% of

operating income was absorbed by impairment losses on

financial assets, ignoring the additional provisions

contributed by capital gains from real estate sales. As a

result, net attributable profit in the year to date came to

€1,877m (down 2.1%) and return on equity (ROE)

remains higher than the sector average, at 34.6%.

Spanish Retail Network

This unit services the financial and non-financial needs

of households, professional practices, retailers and small

businesses with products adapted to each segment.

BBVA has promised to help its customers by providing

financial solutions adapted to their emerging needs in

the current complex environment.

At 30-Sep-09 the unit’s loan portfolio stood at

€102,093m and customer funds are €111,820m. The

profitable growth of business and a new decline in

operating costs (down 4.3% year-on-year) helped profits

to rise 0.9% to €1,241m.

In the private individual segment, mortgage sales

totalled €2,192m in the quarter despite the sluggish real

estate market, lifting market share to 12.7% (a gain of

32 basis points against the 12.4% of 31-Dec-08). This

was supported by a range of financial solutions adapted

to customers, such as a campaign to attract mortgages

away from the competition (Ven a Casa), which

accounted for 20% of sales. And it also helped the

portfolio of residential mortgages to increase to

€69,320m (up 1.3% year-on-year). At 30-Sep-09 total

consumer finance stood at €7,411m. Major support

came from the instant loan service (PIDE) and from the

launch of a new channel

(www.financiatucocheconbbva.es). The new web site

provides customers with information on car loans and

enables them to sign agreements on the portals of

various distributors that offer finance through BBVA.

Despite stiff competition for customer funds, the unit

was successful in gathering savings and current accounts,

salary payments and pensions. Liquid forms of customer

funds rose 13.3% to €30,905m and BBVA’s market share

at 31-Aug-09 (latest available data) increased 18 basis

points compared to a year earlier. During the quarter the

unit launched a new deposit linked to salary payments

33

3Q09 BUSINESS AREASSpain and Portugal

(Depósito Fortaleza Nómina). In just 45 days the

campaign brought in €891m in time deposits, 5,130 new

customers and boosted cross selling with 761 new

accounts for direct salary credits, 248 direct debits and

1,210 cards. In addition, BBVA reinforced its positioning

and leadership in the Spanish mutual fund market. It is

the benchmark for conservative funds, which are the

most popular in 2009. Pension plans grew 7.5%

year-on-year and the balance managed by the unit stands

at €9,752m, maintaining market leadership. Lastly, this

overview of customer funds is complemented by the

placement of the convertible bond issue mentioned above.

The BBVA Patrimonios unit closed the quarter with

funds managed in Spain rising 8.9% year-on-year to

€10,962m and a 7.4% increase in its customer base

(the result of various action plans). In the private

banking sector the unit commenced marketing of the

VISA Infinite card, which offers a series of exclusive

services with the goal of generating customer loyalty. In

addition it ran a media campaign to advertise its new

identity, which now includes high-value customers as

well as the special unit for wealthy customers (BBVA

Patrimonios).

The Insurance unit rounded out its product range with

two new policies in the car (Coche Gama Terceros) and

house (Vivienda Plus) insurance areas, whose prices and

cover meet the needs of specific customer segments. The

volume of premiums issued on individual risk policies

(life and non-life) came to €423m in the year to

September. BBVA Seguros continues to lead in

individual life insurance policies in Spain with a 13.2%

market share at June 2009 (latest available figure).

More than 38,000 people have taken out savings

policies, generating €148m in premiums (up 59.7%).

The small business segment covers professional

practices, the self-employed, retailers, the farming

community and small companies. The corresponding

loan portfolio stands at €14,285m (€16,861m at

30-Sep-08). It has been a difficult year for this segment

but BBVA managed to place 18,300 ICO operations

worth €465m. It also designed a plan for retailers with

competitive deposits and loans. Co-operation

agreements were signed with a freelance-workers

association, with taxi operators and with restaurateurs,

providing their 400,000 members with access to BBVA’s

financial services.

Corporate & Business Banking

The corporate & business banking unit (CBB) handles

SMEs, large companies, institutions and developers,

with specialised branch networks for each segment. It

also contains the product management unit that designs

and markets specific products for different market

segments. The latest FRS report confirms BBVA’s leading

position with a 35.2% nominal market share in the

SME segment and 69.0% in the major company

segment.

In 2009 the unit developed special action plans for each

segment and these helped to consolidate the profitable

growth and customer commitment. The Anticipa Plan

identifies growth opportunities via anticipation and the

Fortaleza Plan helps to increase sales of BBVA’s

products. Other plans aim at enhancing the relationship

with customers whose consumption of banking

products is low.

Despite the adverse environment, the unit’s loan

portfolio at 30-Sep-09 stands at €90,803m (up 0.3%

year-on-year) and customer funds on the balance sheet

are €25,893m, up 3.9% in the quarter in those

gathered in the domestic commercial network.

The policy of profitable growth, the successful

management of business opportunities and the cost

controls helped operating income to rise 7.6%

year-on-year to €1,252m in the first nine months. Net

attributable profit increased 1.4% to €677m.

In the third quarter the unit signed various agreements

related to ICO operations (government-sponsored credit)

in the transport, tourism, cultural and development

sectors. BBVA plays a prominent role in the placement of

the ICO credit lines. In the first nine months it closed

€1,798m of operations, of which the liquidity line

accounts for €1,008m and the SME line €447m.

The unit has more than 60,000 customers in the SME

segment with a loan portfolio of €30,640m and

customer funds of €7,672m. For the first nine months

operating income came to €648m and net attributable

profit was €385m (€412m at 30-Sep-08). The unit

drew up plans to boost the capture of new customers in

order to maintain its current leadership.

34

BUSINESS AREAS 3Q09Spain and Portugal

In the large companies segment, the loan portfolio

stands at €17,108m (up 9.6% year-on-year) and

customer funds are €4,706m (equal to the same date of

last year). Operating income rose 19.7% year-on-year to

€222m and net attributable profit came to €74m.

During the quarter BBVA acted as global co-ordinator

and adviser in a €222m capital increase for NH Hotels.

Lending to institutions grew 19.7% to €24,883m and

customer funds rose 4.3% to €14,887m. Operating

income was €254m (up 31.1% year-on-year) and net

attributable profit reached €173m (up 9.9%).

Important operations during the period include loans of

€236m to Madrid Council and €100m for the regional

government of Galicia.

Manageable lending in the real estate developer

segment continues to fall (down 7.7% in the first nine

months), commensurate with the decline in the housing

market. Therefore the unit switched new finance to the

demand in the public housing program (VPO), which

now accounts for 50% of homes financed (this

percentage has doubled in the last 12 months).

Other units

The Consumer Finance unit manages consumer finance

and on-line banking, via Uno-e, Finanzia and other

companies in Spain, Portugal and Italy. In the first nine

months of 2009 it obtained operating income of €111m

(up 28.4% year-on-year) thanks to good price

management and lower costs (down 12.7%). The net

attributable loss of €88m was due to an increase in

loan-loss provisions following a rise in non-performing

assets, especially those linked to consumer finance.

In Spain the loan portfolio stands at €6,407m, rising

3.7% year-on-year. The market share for consumer

credit increased 22 basis points to reach 4.2%. In the

vehicle prescription business the unit invoiced €725m.

Uno-e’s loan portfolio stands at €1,084m and invoicing

came to €1,283m (€1,487m at 30-Sep-08). Customer

funds managed or brokered by the unit came to

€1,329m, up 4.0%. This includes savings and current

accounts, which increased 9.9%.

In Portugal, BBVA Finanziamento invoiced €173m in

the first nine months and total lending is up 14.1%

year-on-year to €483m. And at 30-Sep-09 the leasing

plan companies in Italy had a fleet of 13,787 vehicles.

BBVA Portugal’s market has suffered less than Spain’s

although consumption and investment are stagnant. The

unit’s retail business remains buoyant with a lower risk

profile and further cost controls. It has a new campaign

for loans that allow customers with mortgages to reduce

their monthly repayments or request an additional loan.

It also launched revolving credit and easy credit cards for

private individuals as well as Business Classic BBVA and

Business Gold BBVA for companies. Other initiatives to

capture and maintain the loyalty of customers include a

programme that offers special conditions for customers

over 59 years of age. It also offers loan insurance for

companies in conjunction with CESCE (an insurance

company). Products available for customer funds include

two special deposits for conservative customers

(Multidepósitos BBVA and Depósito Fortaleza BBVA)

and another for those with a greater risk appetite

(Depósito Dual Acciones BBVA). BBVA Gest, the mutual

fund manager, was picked as best manager in Portugal

by Morningstar Inc. Lastly, in the investment banking

area, the unit signed a €25m leverage finance operation

for Emparque to acquire Cintra Aparcamiento.

The loan portfolio is up 4.9% year-on-year to €6,175m

and customer funds (affected by strong competition)

stand at €1,885m (€2,049m at 30-Sep-08). The increase

in business and suitable price management helped net

interest income to rise 8.9% year-on-year to €65m.

Together with the increase in net fee income and the cost

controls, operating income increased 33.6% to €49m

and net attributable profit jumped 61.4% to €20m.

In the first nine months the insurance unit contributed

revenues of €388m from its own policies and €20m in

brokerage on the policies of other companies. Net

attributable profit came to €207m (up 10.4%

year-on-year).

35

3Q09



NET INTEREST INCOME


Net trading income


GROSS INCOME

Operating costs

Personnel expenses



OPERATING INCOME


Provisions (net) and other gains/losses

INCOME BEFORE TAX

Income tax

NET INCOME

Minority interests


871 75.9 495 425 13.9 373 494 166.3 185

389 24.9 311 265 53.0 173 38 56.9 24

(13) n.m. 310 25 (18.4) 31 (55) n.m. 236

157 (57.6) 370 - n.m. - 93 11.4 83

1,403 (5.6) 1,487 716 24.0 577 570 7.8 529

(389) 4.8 (371) (123) 3.6 (119) (168) (4.5) (176)

(253) 7.2 (236) (75) (0.5) (75) (94) (10.3) (105)

(127) (0.9) (128) (47) 10.4 (43) (72) 3.6 (70)

(8) 35.1 (6) (1) 21.9 (1) (2) 26.9 (1)

1,015 (9.1) 1,116 593 29.3 458 403 13.9 353

53 n.m. (205) 53 n.m. (142) (2) (96.7) (66)

(1) n.m. 8 (1) 130.7 - - n.m. -

1,066 16.0 919 645 103.9 316 401 39.4 287

(294) 70.6 (172) (190) 103.3 (93) (104) 36.8 (76)

773 3.5 747 455 104.1 223 297 40.3 211

(3) (30.8) (4) - - - (2) (46.5) (4)

770 3.7 742 455 104.1 223 295 42.0 207

Δ% Jan.-Sep. 08Jan.-Sep. 09 Δ%Jan.-Sep. 09 Δ% Jan.-Sep. 08Jan.-Sep. 09


Units:

Corporate and Investment Banking Global Markets

Jan.-Sep. 08



Financial assets


• Loans and advances to customers

• Loans and advances to credit institutions and other


Tangible assets

Other assets




Debt certificates




Other liabilities


2,122 60.6 1,321 51 33.7 38 2,063 61.3 1,279

61,252 23.0 49,792 415 (4.8) 435 57,852 24.0 46,643

54,636 (11.3) 61,594 39,740 (20.3) 49,835 13,515 39.0 9,721

39,551 (16.6) 47,427 37,883 (16.9) 45,575 1,591 (12.5) 1,818

15,085 6.5 14,167 1,856 (56.4) 4,261 11,924 50.9 7,902

20,055 167.4 7,500 2,365 n.m. - 20,022 (44.0) 35,741

38 (6.4) 41 1 30.1 1 4 25.5 3

1,684 (11.5) 1,903 26 (88.2) 221 1,256 (9.5) 1,388

139,787 14.4 122,151 42,597 (15.7) 50,531 94,713 (0.1) 94,775

32,382 (19.5) 40,209 880 4.1 845 31,397 (20.1) 39,301

62,689 20.4 52,068 36,962 78.8 20,676 25,642 (18.1) 31,314

(170) n.m. 3 - (100.0) 3 (170) n.m. -

2,135 17.7 1,815 1,134 2.3 1,108 342 16.8 293

- - - - (100.0) 25,064 - - -

34,418 61.6 21,294 - (96.1) 4 34,418 61.7 21,287

4,549 28.1 3,551 1,606 86.3 863 2,480 19.9 2,069

3,785 17.8 3,212 2,014 2.3 1,969 603 18.2 510

Δ% 30-09-0830-09-09 Δ%30-09-09 Δ% 30-09-0830-09-09


Units:

Corporate and Investment Banking Global Markets

30-09-08

36

BUSINESS AREAS 3Q09Wholesale Banking & Asset Management

The Wholesale Banking & Asset Management (WB&AM)

Area handles the Group’s wholesale businesses and asset

management. It is organised around three major units:

Corporate & Investment Banking, Global Markets and

Asset Management. Furthermore it includes the Industrial

and Real Estate Holdings Unit, which contributes to its

diversification, and the Group’s holdings in the CITIC

financial group, associated with expansion in Asia.

In the first nine months of 2009, the area confirmed the

highly recurrent nature of gross income at its main

operating units, Corporate & Investment Banking and

Global Markets, with increases of 24.0% and 7.8%,

respectively. These increases offset the reduction in income

from divestments in the industrial holdings portfolio,

which in the year to 30-Sep-09 were €212m lower than

the same period last year. Despite this, the area only

experienced a decline of €83m (down 5.6%) thanks to the

good performance of recurrent revenues mentioned above.

The growth of recurrent revenue was accompanied by an

improvement in the risk profile because the area took

strategic decisions such as abandoning certain hedge funds

and other alternative investment instruments. Despite this,

Asset Management was able to offset the cost of

discontinuing this line of business thanks to the

performance of traditional investment products, which rose

29.1% year-on-year in the first nine months, and the

significant consolidation of its leadership in the Spanish

market.

Apart from the good revenue performance, operating costs

were also kept under control in the year to September,

rising 4.8%. This resulted in a cost/income ratio of 27.7%

(24.9% in the same period last year). The difference is

partly due to 2008 earnings on sales from the industrial

holdings portfolio. Excluding these earnings, the

cost/income ratio for the first nine months of 2008 would

be 29.1%, 140 basis points higher than the current level.

Operating income for the area was therefore down 9.1%

Wholesale Banking & Asset ManagementOperating income (Million euros)

359411

93

346

257

386

200920081Q 3Q 4Q

–9.1%

2Q 3Q1Q

1,116 1,015

2Q

371

Wholesale Banking & Asset ManagementNet attributable profit (Million euros)

268290

30

185231

268

200920081Q 3Q 4Q

+3.7%

2Q 3Q1Q

742 770

2Q

271




• Deposits

• Assets sold under repurchase agreement


• Mutual funds

• Pension funds

ROE (%)


NPA ratio (%)

Coverage ratio (%)

(1) Including collection accounts.

40,073 (17.4) 48,502

59,627 13.6 52,504

51,676 14.7 45,043

7,951 6.6 7,461

11,039 12.0 9,855

3,874 35.2 2,866

7,165 2.5 6,989

25.9 32.1

27.7 24.9

0.8 0.1

118 n.m.

Δ% 30-09-0830-09-09


WB&AM highlights in the thirdquarter

• The good performance of banking revenues partlyoffset lower sales from the industrial holdingsportfolio.

• The increase in customers’ deposits together withlower lending improved the area’s liquidity profile.

• For the first time BBVA became the leader in the M&A market in Spain by volume of operationsannounced.

• Leadership in investment banking in Mexico.

37

3Q09 BUSINESS AREASWholesale Banking & Asset Management

to €1,015m (up 12.2% if the above-mentioned earnings in

2008 are excluded).

Impairment losses on financial assets were lower. During

the quarter the area released a net amount of provisions

owing to the decline in the loan portfolio (requiring less

generic provisions) and to the focus on customers of greater

credit-worthiness (which is also boosting transactional

business). At the end of September provisions came to a

positive figure of €53m, compared to provisioning of

€205m in the same period last year. WB&AM continues to

enjoy a high level of asset quality with a low non-performing

asset ratio (0.8%) and a coverage ratio of 118%.

As a result, income before tax for WB&AM (counting

only Europe, New York and Asia) came to €1,066m for

the first nine months, an increase of 16.0% year-on-year. It

also increased its contribution to the Group with a net

attributable profit of €770m (up 3.7%). The lower growth

of net profit is because the capital gains in 2008 were

taxed at a lower rate.

At the end of September the area’s gross loan portfolio was

down 17.4% year-on-year to €40,073m, which is mainly

in Corporate & Investment Banking. Customer funds

(deposits, mutual funds and pension funds) performed

well, rising 14.2% to €62,715m. This was the result of a

big increase in customers’ deposits (up 14.7%) following

campaigns at foreign branches (principally London and

New York). The combined effect of the decline in lending

and the rise in fund gathering helped to improve the area’s

liquidity position.

As customary, WB&AM’s contributions (in business and

earnings) in the Americas are reported under the Mexico

and South America areas. If they are added to the above

results (except asset management in South America), the

area’s combined contributions to the Group are those

shown in the table below:

Corporate and Investment Banking

This unit co-ordinates origination, distribution and

management of a complete catalogue of corporate &

investment banking products (corporate finance, structured

finance, equity and debt capital markets), global trade

finance and global transaction services. Coverage of large

corporate customers is specialised by sector (industry

bankers).

At the end of September the unit’s activities were

characterised by a focus on customers with high business

potential. The loan portfolio stood at €38,337m (down

17.8% compared to the same date last year). Nonetheless,

the unit increased net interest income 13.9% year-on-year

thanks to price management and an increase in

transactional business. The yield also increased because the

ratio of net interest income to average total assets in the

first nine months came to 1.18% (1.11% at 30-Sep-08).

The good performance of recurrent income (net interest

income and net fee income) is reflected in gross income,

which climbed 24.0% year-on-year to €716m. Together

with smaller increases in operating costs, this helped

operating income to rise 29.3% year-on-year to €593m.

And thanks to the release of generic provisions and lower

specific provisioning, the unit’s net attributable profit grew

substantially to €455m, compared to €223m for the first

nine months of last year.

In fixed income, the unit consolidated its top ranking in

the Spanish bond market during the first nine months,

concluding more than 60 operations. In the third quarter

BBVA led the third Kingdom of Spain issue of €4,500m. In

Europe it has led 18 operations this year, including the

Enel bond issue (€4,000m). It also participated in

important syndicated loans in the European market such

as Schneider Electric (€1,800m) and SAP (€2,500m).

Operations in Spain included a €1,500m syndicated loan

for ACS.

Business in structured finance was intense during the

quarter. It included €400m to help Emparque acquire

Cintra Aparcamientos and €1,255m for the R1

Expressway in Slovakia.

In the third quarter the sector’s leading magazine, Trade

and Forfaiting Review, awarded BBVA a prize for best

trade bank in Latin America, for the fifth consecutive year.

Wholesale Banking & AssetManagement including the Americas(Million euros)

Gross income

Operating income

Income before tax



Deposits

2,333 12.7 2,070

1,798 15.8 1,553

1,804 32.9 1,357

1,192 21.9 978

51,164 (15.2) 60,350

62,223 (13.2) 54,979

Δ% 30-09-0830-09-09

38

BUSINESS AREAS 3Q09Wholesale Banking & Asset Management

In Equity Capital Markets BBVA participated as global

co-ordinator and adviser in a €222m share capital increase

with preferential subscription rights for NH Hotels.

For the first time the Corporate Finance unit became the

leader in the M&A market in Spain by volume of

operations according to figures from Thomson Reuters.

During the first nine months it provided guidance in

closing nine operations in different sectors and of various

types, totalling more than €18,000m. One of the most

important was the Ferrovial-Cintra merger in which BBVA

acted as exclusive adviser to the Ferrovial Group.

In Global Transaction Services, Tecnocom appointed

BBVA as agent bank in the increase of capital. And

following a 2009 survey of agent banks in major markets,

Global Custodian classified BBVA as “Commended” for

both non-resident and domestic customers.

In Latin America, BBVA led the ranking in syndicated

loans for the second consecutive quarter, according to

information provided by LPC Reuters. Moreover BBVA is

the leader in investment banking in Mexico. It is the top

bank in debt capital markets, equity capital markets and

project finance (sources: Bloomberg and Thomson

Financial).

Global Markets

This unit handles the origination, structuring, distribution

and risk management of market products, which are placed

through the trading rooms in Europe, Asia and the

Americas.

In the third quarter the unit’s revenues from customers and

proprietary trading continued to perform well. Its business

model is increasingly more diversified and international

with strong revenue growth from customers of the trading

floors in Europe (London, Milan, Paris, Lisbon and

Dusseldorf) and the Asian branches. Interest-rate hedging is

one of the main activities apart from recovering volumes of

new issues in the debt market. It also maintained its

position as top broker in Spanish equities with a market

share of 12.8% as of September 2009.

These factors helped the unit’s gross income in Europe and

New York to rise 7.8% year-on-year to €570m. Operating

income was €403m (up 13.9%) and net attributable profit

came to €295m (up 42.0%). The cost/income ratio

improved considerably to 29.4% (33.2% a year earlier).

Mexico and Latin America also achieved double-digit

growth in revenues. Operations included the launch of a

new ETF (MEXTRAC) on the Mexican stock exchange,

which will track the 20 counters in the Dow Jones Mexico

Titans 20 (a stock index). This launch was arranged in

close co-operation with Asset Management.

Asset Management and other business

Asset Management is BBVA’s provider of asset

management solutions. It designs and manages mutual

funds, pension funds and a third-party fund platform.

In the year to September the unit obtained gross income of

€129m, a decline of 2.5% compared to the same period

last year. Nonetheless, the latest quarter reflects a positive

trend compared to the previous two, thanks to the

recovery of funds under management.

At 30-Sep-09 total assets under management in Spain

stood at €50,925m, up 0.8% during the third quarter

helped by the improvement in the capital markets. Of this

amount, mutual funds accounted for €33,974m. This

amount is down 8.8% but the decline is smaller compared

to that of the system, which fell 12.4%. So far this year

BBVA has added 77 basis points to its market share, which

now stands at 19.9%, confirming its leadership. The

average return of its mutual funds is higher than the net

weighted return of the seven biggest managers (which

account for 62.1% of the market). By net return, nearly

70% of BBVA’s mutual funds are in the first two quartiles.

The assets managed in Spanish pension funds grew 5.3%

to €16,951m. Of this amount, individual plans account for

€9,856m and employee and associate schemes €7,095m.

In the first nine months the value of Industrial and Real

Estate Holdings increased around 44%, easily exceeding

the rise in the Ibex35 during the same period.

Lastly, BBVA and CITIC closed their first joint operation in

the third quarter as part of their general finance agreement.

It entails a €75.5m credit for the Chinese railways over 10

years.

39

3Q09

Mexico


NET INTEREST INCOME


Net trading income


GROSS INCOME

Operating costs

Personnel expenses



OPERATING INCOME



INCOME BEFORE TAX

Income tax

NET INCOME

Minority interests


(1) At constant exchange rate.

2,505 (10.8) 3.9 2,809 2,472 (11.3) 3.3 2,788 36 69.0 96.8 22

805 (14.8) (0.7) 944 766 (13.2) 1.1 883 37 (18.9) (5.6) 46

310 (2.0) 14.1 316 227 (4.4) 11.3 238 82 4.9 22.2 78

103 49.9 74.6 68 (96) 39.0 61.9 (69) 206 14.8 33.7 179

3,722 (10.0) 4.8 4,138 3,370 (12.3) 2.2 3,840 361 11.2 29.6 325

(1,158) (14.2) (0.0) (1,350) (1,058) (14.6) (0.5) (1,239) (97) (27.0) (15.0) (133)

(550) (15.2) (1.3) (649) (501) (17.3) (3.6) (605) (48) 8.3 26.2 (45)

(560) (13.1) 1.2 (645) (511) (11.8) 2.8 (579) (47) (45.8) (36.9) (87)

(49) (14.2) (0.0) (57) (47) (14.8) (0.7) (55) (2) 3.6 20.7 (2)

2,564 (8.0) 7.1 2,788 2,312 (11.1) 3.5 2,602 264 37.8 60.5 192

(1,097) 44.9 68.7 (758) (1,097) 44.9 68.7 (758) - - - -

(24) 4.9 22.1 (23) (23) 2.8 19.7 (23) (1) n.m. n.m. -

1,443 (28.1) (16.3) 2,007 1,191 (34.6) (23.8) 1,821 264 37.6 60.2 192

(340) (28.5) (16.7) (475) (272) (35.4) (24.8) (422) (71) 28.5 49.6 (55)

1,103 (28.0) (16.2) 1,532 919 (34.4) (23.6) 1,400 193 41.2 64.5 137

(2) 66.6 94.1 (1) - (35.9) (25.3) - (1) 167.6 211.7 -

1,101 (28.1) (16.2) 1,531 918 (34.4) (23.5) 1,399 192 40.8 64.0 136

Δ% Δ% (1)Jan.-Sep. 09

Mexico

Units:

Banking business Pensions and Insurance

Jan.-Sep. 08 Δ% Δ% (1)Jan.-Sep. 09 Δ% Δ% (1)Jan.-Sep. 09 Jan.-Sep. 08Jan.-Sep. 08



Financial assets




Tangible assets

Other assets




Debt certificates



Other liabilities



8,306 47.3 85.2 5,637 8,306 47.3 85.2 5,637 - - - -

22,732 (7.6) 16.1 24,597 19,578 (8.9) 14.5 21,495 3,361 (2.9) 22.0 3,462

27,074 (25.0) (5.8) 36,116 26,969 (25.1) (5.8) 35,995 185 (6.8) 17.1 199

25,190 (19.8) 0.8 31,402 25,096 (19.8) 0.8 31,294 103 (5.2) 19.1 109

1,884 (60.0) (49.8) 4,714 1,873 (60.2) (49.9) 4,702 82 (8.6) 14.8 90

746 (9.4) 13.9 823 739 (9.5) 13.7 817 6 7.6 35.2 6

1,384 (24.8) (5.4) 1,840 1,747 7.1 34.6 1,631 106 (22.9) (3.2) 138

60,241 (12.7) 9.7 69,012 57,339 (12.6) 9.9 65,575 3,659 (3.8) 20.8 3,805

12,879 (13.2) 9.0 14,843 12,879 (13.2) 9.0 14,843 - - - -

28,979 (15.9) 5.7 34,463 29,052 (15.9) 5.7 34,541 - - - -

3,651 4.6 31.4 3,490 3,651 4.6 31.4 3,490 - - - -

1,462 (10.9) 12.0 1,641 1,856 20.1 50.9 1,546 - - - -

2,935 (12.4) 10.1 3,351 2,935 (12.4) 10.1 3,351 - - - -

7,737 (6.9) 17.0 8,308 4,651 (9.4) 13.8 5,135 3,413 (4.0) 20.7 3,554

2,599 (10.9) 12.0 2,917 2,316 (13.2) 9.0 2,669 246 (1.9) 23.3 251

Δ% Δ% (1)30-09-09

Mexico

Units:

Banking business Pensions and Insurance

30-09-08 Δ% Δ% (1)30-09-09 Δ% Δ% (1)30-09-09 30-09-0830-09-08

40

BUSINESS AREAS 3Q09Mexico

This area runs the banking, pensions and insurance

businesses that the BBVA Bancomer Financial Group

operates in Mexico.

During the third quarter of this year, the Mexican

economy has shown signs of gradual recovery,

suggesting that the worst of the crisis may be over.

Despite reporting the greatest contraction in the last 30

years, this downturn has been different from previous

ones. This time the country’s internal structural

strengths enabled markets to get through without any

breakdowns in the financial system or crises in the

balance of payments and with only a slight correction in

the labour market.

Inflation continues to slow down. At annual rates, it

ended the quarter at 4.89%, down from the 5.74%

reported in the previous quarter. This was

fundamentally due to shrinking demand and a policy of

freezing public-sector prices (above all energy prices).

The exchange rate ended September at 19.7 pesos to

the euro, with an additional depreciation of 6.0% over

the quarter. In this economic environment, the Bank of

Mexico has maintained the funding rate for banks at

4.50% since 17th July.

The attached tables show the area’s performance with

both current and constant exchange rates. The

comments below are referenced to the constant rate

figures.

Despite adverse conditions, during the first nine months

of 2009 the area’s net interest income grew 3.9%

year-on-year. The main driving factors were the positive

sales results in all businesses and well focussed price

management. Thus, the public has continued to place its

funds in the bank, with current accounts rising 11.0%

year-on-year. Meanwhile, term deposits have gone up

6.8% from one year ago. Price management in the

loan-book has continued to offset the drop in consumer

Mexico. Operating income(Million euros at constant exchange rate)

830 769 785794863833

(1) At current exchange rate: –8.0%.

200920081Q 3Q 4Q

+7.1% (1)

2Q 3Q1Q

2,393 2,564

2Q

867

Mexico. Net attributable profit(Million euros at constant exchange rate)

(1) At current exchange rate: –28.1%.

435393

487

380 384365 353

200920081Q 3Q 4Q

–16.2% (1)

2Q 3Q1Q

1,315 1,101

2Q





• Mutual funds

• Pension funds

Other placements

Customer portfolios


NPA ratio (%)

Coverage ratio (%)

(1) At constant exchange rate.(2) Excluding deposits and Bancomer’s Market unit repos.

Δ% Δ% (1)30-09-09

Mexico

30-09-08

26,643 (19.7) 0.9 33,184

27,810 (16.2) 5.3 33,191

18,881 (12.7) 9.7 21,632

10,160 (19.0) 1.8 12,543

8,721 (4.0) 20.6 9,089

2,850 (16.9) 4.5 3,429

4,869 (21.8) (1.7) 6,225

31.1 32.6

4.0 2.7

135 192

Mexico highlights in the thirdquarter

• Good commercial activity performance and pricemanagement continue to drive revenues.

• Cost-income ratio hit a new high, with practically flatyear-on-year cost growth.

• Stabilisation of impairment losses and reduction ofthe credit card NPA ratio.

• Moody’s confirmed the rating of Bancomer’s financialstrength.

41

3Q09 BUSINESS AREASMexico

products and credit cards, whose higher spreads feed the

net interest income.

Fee income stood at €805m, practically flat to

September 2008, despite lower volumes, above all in

credit cards. Net trading income rose significantly over

the year, going up 14.1% to reach €310m year to date

by the end of September 2009. As indicated in earlier

quarters, this rise is especially positive as it is referenced

against the same period of 2008, which included the

proceeds of the VISA IPO. The insurance and

pension-fund businesses also contributed sound

earnings. Gross income rose 4.8% to reach €3,722m

during the first nine months of the year.

Various efficiency plans implemented to improve

management and contain costs helped to maintain

operating expenses at the same level as the previous

year. With the rise in gross income mentioned above,

this meant that the cost-income ratio hit a new record,

ending September at 31.1%. This was 27 basis points

lower than in the second quarter of 2009. With positive

revenue and cost performance, the year-to-date

operating income for the nine months was €2,564m,

with a year-on-year increase of 7.1%.

Impairment losses on financial assets stood at

€1,097m year to date. This 68.7% year-on-year rise is

lower than in previous quarters. The percentage of the

operating income used to absorb these losses is also

continuing to drop. In the third quarter, it was 42.2%,

as against 43.1% in 2Q09. This is one of the lowest

percentages within the Mexican banking industry.

The area’s performance and administration was thus

proven to be up to the circumstances, enabling it to

record a positive net attributable profit from January to

September 2009 of €1,101m despite the difficult

environment for the country as a whole.

Banking business

Bancomer’s positive performance compares favourably

against its peers in the main indicators for asset quality,

thanks to its well focussed risk management.

During the third quarter of 2009, Moody’s confirmed

its C+ rating of Bancomer’s financial strength. This

ratifies the bank’s reputation for robustness and

leadership in the Mexican market, even during troubled

times.

Bancomer’s lending activity maintained a very similar

loan-book at 30-Sept-09 to what it had the previous

year: €26,550m. However, the loan-book mix has

changed substantially, as the consumer portfolio

continues to lose share. It now accounts for 22% of

total gross customer lending, as compared with the

26% share it had in September 2008. It reflects a

13.1% drop over the period. This is the outcome of

low business volumes which reflect both the general

economic downturn and the strict lending standards

and the selective acceptance policy applied to

customers.

Its portfolio of loans to small and medium-sized

enterprises (SMEs) was the most dynamic, growing

24.6% year on year, driven by Bancomer’s strategies to

boost lending this year. During the third quarter, the

area implemented a successful programme to provide

small businesses with liquidity. Bancomer placed €93m

through this programme and restructured a further

€61m, benefitting more than 6,000 SMEs. Bancomer

has continued to provide a line of liquidity to larger

companies too (in keeping with their current repayment

capacities). Its programme to support business with

credit has had 220 beneficiaries, companies borrowing

more than €263m to ensure their operations can run

without financial pressure and avoid deterioration of

their sales activities. Bancomer also reinforced its

leadership position in government lending during the

third quarter of this year. It granted a total of €557m in

credit to monetarise the resources of the FEIEF (a

federated fund for revenue stabilisation). This sum will

be drawn down gradually over time.

Through its Investment & Corporate Banking unit,

Bancomer helped corporations to increase liquidity,

participating in 20 debt issues and 5 syndicated loan

facilities during the third quarter. For the fourth quarter

running, the bank has headed the ranking tables, with

28.3% and 31.6% of the total volume placed in the

market during 3Q09, according to Bloomberg and

Thomson Financial, respectively.

Its mortgage book maintained a year-on-year growth of

9.5%. At the end of September, it stood at €8,521m.

Bancomer maintains its leadership in new mortgages,

42

BUSINESS AREAS 3Q09Mexico

reaching a 35.2% share of new loans on the market at

the end of August 2009, 229 basis points up on the figure

for August 2008. To 30th September 2009, Bancomer has

granted 26,909 loans for individual homes and 55,509

for housing developers. The bank also tries to raise the

quality of life for Mexican families. It launched a special

product for an emerging economy, a personal credit for

people with problems proving their revenues. Apart from

offering specific financial conditions for this segment, it

also incorporates the family home into a trust for the first

years of the loan, to facilitate its final recovery.

In the portfolio of doubtful loans, the ratio of

non-performing assets to the total was 4.0% on 30th

September 2009, just 11 basis points higher than the

NPA ratio for the second quarter this year. Meanwhile,

coverage stood at 135% on the same date.

Customer funds (bank deposits, mutual funds and

investment companies and other customer products)

ended September 2009 at €40,819m, which was 4.3%

up on 30-Sep-08. This positive performance reflects

Bancomer’s well-focussed strategy and customer service.

The bank’s market share in customer funds gathered

grew 140 basis points in September 2009 compared to

the same month of the previous year. Current accounts

and term deposits showed brisk growth, reaching a

balance of €13,593m and €7,316m, respectively. This

was the result of 11.0% growth year on year in current

accounts, and 6.8% in term deposits. The composition

of the customer funds at the end of September 2009 was

very similar to that of the same month in 2008. Current

accounts accounted for the largest share, 33%; followed

by mutual funds and investment companies, with 25%;

and term deposits with 18%. The remaining 24%

comprises other customer products and funds

denominated in foreign currency.

During the third quarter, Bancomer securitised a

portfolio of mortgage loans to individuals for €299m

and placed two one-year warrant issues against the

Standard & Poors 500 index. These were the first

optional securities issued by a bank in Mexico with a

tenor of over three months.

Finally, Bancomer was market leader in capital issues,

arranging 20.6% of the issues made on the local

market. Thomson Financial ranked Bancomer as the

market leader in structured finance, with a market share

of 14.3% at the end of the third quarter.

Pensions and Insurance

During January-September 2009, the Group’s insurance

and pension businesses in Mexico have generated an

attributable profit of €192m, 64.0% up on the profit

attained in the same period of 2008.

Afore Bancomer consolidated its leadership in the

pension-fund business this quarter, gathering the greatest

amount of voluntary contributions and corporate

contributions within the retirement savings scheme in

Mexico. It ended September with an attributable profit of

€33m (up 44.5%). As in previous quarters, this positive

result was based on good sales performance, the

favourable evolution of interest revenues and cost control,

with expenses shrinking 16.3% year on year. This was

achieved against a backdrop of falling unemployment

throughout the country. The company’s €47m operating

income reflects a rise of 43.5% to year-on-year.

The insurance business obtained an attributable profit

of €158m to September, with a year-on-year increase of

68.8%. Dynamic sales have been the defining feature of

the period, especially of savings products and products

not linked directly to banking activity. These have offset

the more moderate growth in the other business lines.

The area wrote €566m in business over the

nine-months (including sales of savings products),

reflecting a year-on-year growth of 14.6%.

43

3Q09

The United States


NET INTEREST INCOME


Net trading income


GROSS INCOME

Operating costs

Personnel expenses



OPERATING INCOME



INCOME BEFORE TAX

Income tax

NET INCOME

Minority interests


MEMORANDUM ITEM: NET ATTRIBUTABLE PROFIT EXCLUDING AMORTIZATION OF THE INTANGIBLE ASSETS


1,100 14.2 2.6 963

411 2.5 (7.9) 401

135 36.1 22.3 99

(26) n.m. n.m. 18

1,620 9.3 (1.8) 1,481

(962) (0.0) (10.2) (962)

(498) 2.8 (7.7) (484)

(308) 2.4 (8.1) (301)

(157) (11.7) (20.7) (177)

657 26.7 13.8 519

(479) 89.8 70.5 (252)

(29) n.m. n.m. 5

150 (44.7) (50.3) 272

(47) (45.9) (51.4) (87)

103 (44.1) (49.8) 184

- n.m. n.m. -

103 (44.1) (49.8) 184

162 (37.8) (38.4) 260

Jan.-Sep. 08Δ% (1)Δ%Jan.-Sep. 09

The United States



Financial assets




Tangible assets

Other assets




Debt certificates



Other liabilities



919 80.9 85.2 508

6,801 (19.6) (17.6) 8,454

34,713 14.7 17.4 30,272

34,001 14.7 17.4 29,639

712 12.5 15.2 633

706 (4.5) (2.3) 740

1,399 (2.0) 0.3 1,429

44,538 7.6 10.1 41,402

3,473 (47.8) (46.6) 6,656

34,293 17.3 20.1 29,242

729 29.9 33.0 561

884 (15.6) (13.6) 1,047

217 217.0 224.6 68

2,474 14.8 17.6 2,155

2,467 47.6 51.1 1,672

30-09-08Δ% (1)Δ%30-09-09

The United States

44

BUSINESS AREAS 3Q09The United States

Economic activity contraction has eased since the first

half of 2009. With improvements in the latest data,

third-quarter GDP is expected to rise for the first time

since the fourth quarter of 2007, although future

economic growth is expected to be slow and wrought

with uncertainty.

The government launched the popular Cash for

Clunkers program in July as part of the American

Recovery and Reinvestment Act, which resulted in

700,000 new car deals. This program has had a visible

impact on personal outlays, which could activate

consumption. However, the labour market is expected

to remain weak and consumers’ debt overhang will

continue to dampen household spending.

The residential real estate market has also received a

boost from deep price discounts, tax credit for first-time

buyers and favourable mortgage rates. This is causing

new and existing home sales to rise, although residential

investment will remain subdued due to excess

inventories of existing homes. Non-residential

investment (NRI) is expected to contract at a slower

rate. Corporate profits are improving on a quarterly

basis. Furthermore, economic indicators are pointing to

growth in the manufacturing sector. Nevertheless, the

deterioration of commercial real estate due to falling

rents could put downward pressure on the structures

component of NRI.

Exports are one component that may be outperforming

expectations, which could help strengthen the US

recovery process. In particular, exports to China have

increased significantly since they hit a low in January

2009.

Lastly, the Federal Reserve’s expansionary monetary

policy and asset purchase program have aided in

slowing economic contraction and stabilizing the

financial markets. Although the Fed forecasts economic

growth to take hold in the second half of 2009, its

expectation of a slow recovery due to abundant

The United States. Operating income(Million euros at constant exchange rate)

(1) At current exchange rate: +26.7%.

200 205165173

243

194

200920081Q 3Q 4Q

+13.8% (1)

2Q 3Q1Q

578 657

2Q

220

The United States. Net attributable profit(Million euros at constant exchange rate)

(1) At current exchange rate: —44.1%.

92 91

2222 20

40

200920081Q 3Q 4Q

—49.8% (1)

2Q 3Q1Q

205 103

2Q

42




ROE (%)


NPA ratio (%)

Coverage ratio (%)

(1) At constant exchange rate.(2) Excluding deposits and Market unit repos.

34,598 14.4 17.2 30,231

32,607 29.5 32.5 25,188

5.5 14.2

59.4 65.0

3.9 2.7

43 73

30-09-08Δ% (1)Δ%30-09-09

The United States

The United States highlights in thethird quarter

• Making the most of opportunities: the Guarantyacquisition has given BBVA Compass a higher profilein the Sunbelt area.

• Excellent operating-cost performance based on theintegration process.

• Improvement of the area’s operating income, with ayear-on-year increase of 13.8%.

• Business volumes remained flat over the previousyear, despite the significant economic slowdownduring the period.

45

3Q09 BUSINESS AREASThe United States

economic slack warrants holding the target rate at 0%

to 0.25% for a prolonged period of time.

The dollar exchange rate weakened against the euro

over the last twelve months by 2.3%, ending September

at 1.46 dollars per euro. However, the average exchange

rate recorded an appreciation of 11.4% year over year.

Its impact is negative on business volumes and the

balance sheet, but positive on the income statement.

Unless otherwise indicated, all comments below refer to

changes at a constant exchange rate.

Effective 22nd August 2009, BBVA Compass acquired

certain assets and liabilities of the Guaranty Financial

Group (Guaranty) in an FDIC-assisted transaction. This

investment offers compelling financial returns, an

opportunity to meaningfully expand BBVA U.S.A.’s retail

banking franchise (164 branches and 300,000 customers

in Texas and California) and, based on the loss share

agreement with the FDIC, minimal credit risk (FDIC

shares 80% of the losses on the first $2,285m, and 95%

of the losses thereafter). Moreover, Guaranty added

$7,500m in loans and $11,400m in customer deposits.

The area’s business volumes grew, its loan-book

reaching €34,598m at 30th September, and customer

deposits €32,607m. These figures were up 17.2% and

32.5% year-on-year respectively, above all due to the

impact of Guaranty. Without Guaranty, the loan-book

remains practically flat while customer deposits have

grown 1.1%.

Operating income rose to €657m (up 13.8% against the

same period of the previous year), driven by a 10.2%

drop in operating costs triggered mainly by lower

amortisation of intangibles and lower merger &

integration costs. This excellent cost performance offset

the 1.8% drop in revenues, making it possible to absorb

the impairment losses on financial assets and obtain a

positive attributable profit of €103m. (This figure is

€162m without amortisation of intangible assets.) All this

was achieved without taking up any kind of public aid.

Finally, the improvement in the area’s non-performing

asset ratio (NPA ratio) brought it to 3.9% on 30th

September 2009, down 56 basis points against the 4.5%

reported the previous quarter, mainly due to the

addition of Guaranty.

BBVA Compass banking group

On 10th September 2009, BBVA Compass incorporated

Guaranty and BBVA Bancomer USA into its operations

and earnings. Previous periods have been restated to

produce like-for-like comparisons following the

incorporation of BBVA Bancomer USA. BBVA Compass

represents approximately 91% of the area’s total assets.

On 30th September 2009, loans were €31,549m, up

19.9% year-on-year. Customer deposits increased

34.1% to reach €31,191m. Without the impact of

Guaranty, lending rose 1.3%, while customer deposits

rose 0.8%.

Year-to-date net interest income stood at €1,005m on

30th September 2009, with a year-on-year growth of

Development of BBVA s franchise in the United States

2004 2005 2006 2007 2009

Landing Texas Sunbelt

BBVA New York1987

BBVA Puerto Rico1968

BancomerTransfer Services

1994

2005 2006 2007 2009

TexasMarketshare

0.94%

TexasMarket share

2.96%

Texas Top 4Market share

4.62%

Texas Top 4Market share

6.04%

3.2%. The 1.5% year-on-year dip in gross income was

due to decreased fees in most categories, because of

slower volume growth and higher FDIC insurance

(increase in rate and special assessment).

Year-to-date operating expenses declined 11.1%

year-on-year, due to lower amortisation of intangibles,

merger & integration costs and salaries & benefits.

Consequently, the operating income increased to

€595m, up 17.2% year-on-year.

Thus, the cost-income ratio for the first nine months of

the year was 59.9%, an improvement over the 66.3%

of the same period of the previous year.

After impairment losses on financial assets, the

year-to-date net attributable profit reached €104m at

the end of September (€163m excluding amortisation of

intangibles).

At 30th September 2009, the Corporate & Commercial

Group unit (CCG) (excluding Guaranty) managed a

loan portfolio of €14,806m (up 2.9% year-on-year).

Customer deposits were €8,103m, having grown 24.9%

since September 2008. This growth was mainly driven

by non-interest bearing deposits that have experienced

exceptional growth, primarily the results of strong

correspondent banking efforts and increases in several

large relationships within the line of business.

The Retail Banking unit ended the third quarter with a

loan portfolio of €8,345m, flat to September 2008 as

increases in residential real estate were offset by the

run-off in the Indirect Auto Dealer and Student Lending

portfolios. The unit generated €379m of new residential

mortgages over the third quarter, significantly higher

than both 2Q09 and 3Q08. Customer deposits were

€12,443m, down €210m against the same date of last

year.

The Wealth Management unit manages a €1,973m loan

portfolio, having grown 15.1% since September 2008.

Additionally, deposits have increased to €3,100m

–nearly doubling from a year ago. The equity-linked

Power CD, launched in March, has generated $29m in

new deposits for the quarter and has already reached its

annual goal of $100m since inception. At 30th

September 2009, the unit had €12,347m assets under

management. Their 5.8% decline from a year ago

reflects the economic downturn.

Other units

At 30th September 2009, BBVA Puerto Rico managed a

loan portfolio of €3,049m, down 5.2% from September

2008. Customer deposits were €1,416m, growing 4.8%

from last year. Operating profit for the year to date

was €56m, decreasing 5.3% from a year ago.

Attributable profit, after €66m impairment losses on

financial assets, stood at a negative €6 million.

Finally, BTS consolidated its position as the biggest

remittance operator between USA and Mexico,

reporting an attributable profit of €11m for the first

nine months of 2009, representing year-on-year growth

of 41.9%.

46

BUSINESS AREAS 3Q09The United States

47

3Q09

South America


NET INTEREST INCOME


Net trading income


GROSS INCOME

Operating costs

Personnel expenses



OPERATING INCOME



INCOME BEFORE TAX

Income tax

NET INCOME

Minority interests



1,822 17.3 15.6 1,554 1,790 20.7 18.6 1,483 34 (52.7) (49.9) 73

619 10.5 11.1 561 462 15.5 14.9 400 155 (4.4) (1.0) 162

360 121.6 122.3 163 257 49.0 49.4 173 103 n.m. n.m. (10)

(2) n.m. n.m. 7 (76) 81.0 72.4 (42) 83 53.6 57.2 54

2,800 22.6 21.8 2,284 2,433 20.8 19.3 2,014 375 34.5 39.9 279

(1,116) 8.8 9.3 (1,026) (932) 13.9 13.5 (819) (162) (13.2) (9.1) (187)

(574) 9.7 10.6 (523) (478) 17.1 17.0 (408) (80) (16.9) (13.0) (97)

(457) 6.9 7.3 (427) (377) 9.8 9.3 (343) (74) (9.4) (5.2) (82)

(85) 13.0 12.3 (75) (77) 15.3 13.8 (67) (8) (6.3) (1.0) (8)

1,684 33.9 31.7 1,258 1,501 25.6 23.2 1,195 213 130.6 137.0 92

(310) 46.1 46.9 (212) (306) 44.2 44.9 (212) (4) n.m. n.m. -

(8) 79.7 38.1 (5) (5) 86.5 14.3 (2) (5) 113.9 127.7 (2)

1,365 31.2 28.6 1,041 1,191 21.4 18.7 980 204 126.5 132.5 90

(316) 28.2 24.9 (247) (279) 23.7 19.8 (225) (47) 54.6 59.1 (30)

1,049 32.1 29.8 794 912 20.7 18.3 755 158 162.7 169.4 60

(360) 41.0 34.4 (255) (312) 29.2 22.8 (242) (48) 250.2 248.7 (14)

689 27.8 27.5 539 600 16.8 16.1 514 110 137.0 145.3 46

Δ% Δ% (1)Jan.-Sep. 09

South America

Units:

Banking businesses Pensions and Insurance

Jan.-Sep. 08 Δ% Δ% (1)Jan.-Sep. 09 Δ% Δ% (1)Jan.-Sep. 09 Jan.-Sep. 08Jan.-Sep. 08



Financial assets




Tangible assets

Other assets




Debt certificates



Other assets



4,872 (1.8) 0.7 4,961 4,871 (1.8) 0.7 4,961 - - - -

7,366 45.2 50.9 5,073 6,162 47.7 52.9 4,172 1,778 59.7 69.3 1,113

27,126 (1.4) 0.3 27,521 26,623 (0.9) 0.6 26,853 631 (18.8) (8.8) 777

23,608 (2.2) (0.8) 24,144 23,409 (2.0) (0.8) 23,877 230 (25.6) (12.0) 310

3,518 4.2 8.8 3,377 3,214 8.0 12.0 2,976 400 (14.3) (6.8) 467

500 6.3 10.9 470 453 13.7 17.9 399 46 (35.0) (29.8) 71

2,132 15.0 18.6 1,855 1,323 8.5 12.2 1,220 141 (16.2) (7.3) 168

41,996 5.3 7.7 39,880 39,433 4.9 6.9 37,605 2,596 21.9 32.5 2,130

2,854 (17.5) (16.2) 3,458 2,849 (17.5) (16.2) 3,452 9 (35.5) (27.4) 14

27,908 4.2 6.3 26,785 28,003 4.3 6.4 26,853 - - - -

1,545 40.4 38.1 1,100 1,545 40.4 38.1 1,100 - - - -

1,402 24.7 23.7 1,124 705 9.0 7.5 647 - - - -

522 (40.0) (40.1) 870 522 (40.0) (40.1) 870 - - - -

5,364 18.1 25.3 4,544 4,051 26.5 32.1 3,202 1,944 21.8 33.3 1,596

2,400 20.1 23.5 1,998 1,757 18.7 20.7 1,480 643 23.8 31.5 519

Δ% Δ% (1)30-09-09

South America

Units:

Banking businesses Pensions and Insurance

30-09-08 Δ% Δ% (1)30-09-09 Δ% Δ% (1)30-09-09 30-09-0830-09-08

48

BUSINESS AREAS 3Q09South America

The South America area manages the BBVA Group’s

banking, pension and insurance businesses in the region.

Year-on-year comparison of the business variables and

earnings in the area are impacted by the divestment of the

Consolidar health business and the State takeover of the

Consolidar pension fund, both of which took place in the

fourth quarter of last year.

Although the region’s macro-economy still shows quite

moderate activity levels, encouraging signs of recovery have

appeared, such as an improvement in consumer confidence, a

slight increase in foreign trade, and rising business

expectations. There are hopes that the economy will

re-establish itself early next year, based on two positive

factors. Firstly, the abundant liquidity created by monetary

easing, fiscal-policy stimulation and improvement in

commodity and financial-asset prices. Secondly, a return to

more normal risk-aversion levels, as interest rates and country

risk dropped, enabling several countries in the region to place

issues abroad under quite standard conditions. The financial

systems in the region are still performing well, albeit reflecting

lower business volumes. However, their returns and their

solvency levels are holding up well and asset quality is not

suffering the marked drop seen in other parts of the world.

During the third quarter, most currencies’ exchange rates

strengthened against the US dollar, largely offsetting the

depreciation observed in the first half of the year. The

impact on the area’s financial statements was slightly

positive in the income statement, but negative in the

balance sheet. As usual, the comments in this section refer

to the columns in the attached tables showing year-on-year

changes at a constant exchange rate.

Against this backdrop, the area performed very well, as it

grew revenues and continued to prune expenses without

undermining the quality of its assets. This has meant that

in the first nine months of 2009, the net income reached

€1,049m, a similar contribution to that of Mexico. The

area’s net attributable profit reached €689m, with a

year-on-year increase of 27.5% and a return on equity

(ROE) of 42.4% (37.7% in the same period of 2008).

South America. Operating income(Million euros at constant exchange rate)


431 421497

426

564537

200920081Q 3Q 4Q

+31.7% (1)

2Q 3Q1Q

1,279 1,684

2Q

583

South America. Net attributable profit(Million euros at constant exchange rate)


182 172 182187

232219

200920081Q 3Q 4Q

+27.5% (1)

2Q 3Q1Q

540 689

2Q

238





• Mutual funds

• Pension funds

ROE (%)


NPA ratio (%)

Coverage ratio (%)

(1) At constant exchange rate.(2) Including debt certificates.

Δ% Δ% (1)30-09-09

South America

30-09-08

24,529 (1.7) (0.3) 24,946

29,899 6.1 8.1 28,169

35,619 6.8 8.7 33,360

2,439 60.8 61.6 1,516

33,180 4.2 6.2 31,843

42.4 37.7

39.9 44.9

2.8 2.0

127 147

South America highlights in thethird quarter

• Excellent results both in banks and pensions &insurance.

• Significant advance in customer funds.

• Maintenance of solid profitability and solvency levels.

• Good asset quality with NPAs stable and undercontrol.

49

3Q09 BUSINESS AREASSouth America

As in earlier quarters, focussed management of entry prices

and firm handling of spreads have been key factors to

compensate for the moderation in the growth of lending

volumes grew more slowly (ending September at

€24,529m), practically flat against the previous year

(–0.3%). Meanwhile, customer funds in the banks ended

September at €32,338m (including mutual-fund balances).

This was a year-on-year growth of 10.8%. Current

accounts performed especially well, rising 20.1% against

September 2008. The assets under management in the

pension-fund business reached €33,180m at the end of the

quarter, with like-for-like growth of 17.6% year-on-year (ie,

excluding the impact of the exit from the Consolidar AFJP).

Year-to-date, 9.0% more assets were brought in than during

the same nine-month period of 2008. In the insurance

companies the year-on-year comparison is impacted by the

exit of Consolidar Salud at the end of last year.

Revenues continued to evolve positively, especially net

interest income, which went up to €1,822m year to date,

15.6% more than the first nine months of the previous

year, driven by improved spreads. Fee income also

performed favourably, fed by revenues related to customer

business. It stood at €619m to September (up 11.1%). Net

trading income (at €360m) benefitted from the bullish year

on the financial markets, with high returns from the

pension fund managers’ and the insurance companies’

proprietary trading, and the realisation of capital gains on

equity-portfolio divestments during the first half of the

year. Year to date gross income to September reached

€2,800m. Year-on-year growth was a sound 21.8%.

Cost control was another fundamental issue this year.

Operating costs stood at €1,116m, their growth slowing to

9.3%, significantly below the average inflation rate for the

region. This improved the cost-income ratio to 39.9%

(44.9% in the first nine months of 2008), while operating

income, at €1,684m was up 31.7% year-on-year.

During the last three months, risk acceptance policy has

been strict and the active recovery measures adopted in

previous quarters have been maintained, such that there

was hardly any worsening of asset quality. The NPA ratio

was kept under control and stable, standing at 2.8% at the

end of September, a similar level against the 2.6% reported

at the end of the second quarter and not far from the 2008

year-end ratio of 2.1%. Impairment losses on financial

assets were €310m to September, with a year-on-year

increase of 46.9%. Coverage of doubtful risks remained

within the area’s comfort zone (127%).

Banking business

The entities comprising the area’s banking business

contributed an attributable profit of €600m over the last

nine months. This was a year-on-year increase of 16.1%.

The details of their performance are highlighted below.

In Argentina, BBVA Banco Francés generated an

attributable profit of €91m to September, influenced by

excellent net interest and fee income, which rose

respectively at 22.9% and 34.0% year-on-year, despite the

notable slowdown in lending growth (up 6.9%, excluding

loans to the public sector, which were affected by the swap

of secured loans carried out at the end of last year).

Customer funds behaved very well, growing 17.3% year-

on-year. The rising revenues and moderation in costs

brought operating income up to €197m (a 37.5% rise

year-on-year). Euromoney declared BBVA Banco Francés to

be the best bank in Argentina in 2009.

BBVA Chile and Forum brought in an attributable profit of

€61m to September (up 36.8%). Gross income grew 30.3%,

boosted by the excellent performance of several income lines,

especially fee income (up 43.0%) and net trading income (up

252.8%). Trading income was boosted by divestment from

the fixed-income portfolio during the first half of the year.

Business-volume growth slowed significantly, although

consumer credit and transactional customer funds continued

performing well, rising 5.8% and 8.3%, respectively.

Operating income performed well, reaching €166m over the

nine month period, reporting a 51.0% rise.

In Colombia, BBVA’s banking business generated €112m

in attributable profit. Here too, the performance of

revenues was the key to this 10.4% growth. Net interest

income showed healthy growth (up 11.7%), as active

management of spreads offset the decline in the loan

book experienced by the entire financial industry in

Colombia. Apart from these favourable data on the

revenue side, costs grew just 2.5%, such that the

cost-income ratio at the end of September was 36.6% (as

against 40.5% one year earlier) and operating income

stood at €280m (up 20.9%). Euromoney ranked BBVA

Colombia as having the best transactional services in the

country for 2009.

BBVA Banco Continental in Peru obtained an attributable

profit of €89m (up 39.2%). Its revenues also showed

excellent performance, especially its net interest income (up

Country

Argentina

Chile

Colombia

Peru

Venezuela

Other countries (1)

TOTAL

(1) Panama, Paraguay, Uruguay, Bolivia and Ecuador. Additionally, it includes eliminations and other charges.

50

BUSINESS AREAS 3Q09South America

29.2%), due to focussed management of spreads. This

made it possible to offset the slowdown in lending activity,

which nonetheless maintained positive growth of 4.4%, as

did customer funds (up 1.5%). With the help of cost

control, the year-to-date operating income showed a

year-on-year increase of 35.0% to September. BBVA Banco

Continental continues to be the most profitable bank in

Peru, according to reports in the national press. According

to the annual ranking published by the magazine América

Economía, BBVA Banco Continental is the best bank in

Peru and the fourth in Latin America.

In Venezuela, BBVA Banco Provincial contributed an

attributable profit of €197m to September (up 23.8%).

Despite the regulatory constraints on rates for both assets

and liabilities, the bank was able to report a year-on-year

increase of 21.4% in its net interest income, defending

spreads and growing its volumes (which rose 13.9% in

lending and 30.7% in customer funds). The rise in costs

was moderate (up 18.1%) in an environment of high

inflation, leading to a cost-income ratio of 39.5% at the

end of September. Operating income for the nine months

showed an increase of 7.3% against the January-September

period of 2008.

Elsewhere in the region, BBVA Panama reported a

year-to-date profit of €23m (up 0.1%); BBVA Paraguay

€21m (up 29.7%) and BBVA Uruguay, €5m (down 42.8%).

Pensions and Insurance

The Pensions & Insurance unit in South America obtained

an attributable profit of €110m to September, 145.3%

more than in 2008. Of this, €73m came from the pension

business and €37m from the insurance business. In the

third quarter, sales remained strong in all the companies,

despite the employment figures for the region.

AFP Provida, in Chile, contributed €52m in attributable

profit to September (as against €7m in the first nine

months of 2008). This was driven by the performance of

new assets under management (up 13.0%), the evolution

of financial results and the progressive pruning of costs (up

just 3.6%). This fed into an operating income of €100m

(as against €14m during the same period of 2008).

The three companies in the Consolidar Group generated an

attributable profit of €14m over the nine-month period,

with very positive progress in sales and a slowdown in

costs.

In the rest of the companies, the most significant figures

were the €12m attributable profit brought in from AFP

Horizonte in Peru, and the €13m attributable profit from

AFP Horizonte in Colombia. Both benefitted from good

sales figures and improved financial results.

South America. Data per country (banking business, pensions and insurance)(Million euros)

224 19.6 28.2 187 105 (16.5) (10.4) 126

272 93.7 105.6 140 117 89.0 100.7 62

310 18.6 26.8 262 129 14.6 22.5 113

348 48.1 41.5 235 101 61.0 53.9 63

494 21.5 9.1 407 206 39.5 25.2 148

36 32.3 25.1 27 30 8.9 4.9 27

1,684 33.9 31.7 1,258 689 27.8 27.5 539

Δ%Δ% at constantexchange rates


Operating income

Δ%Δ% at constantexchange rates



51

3Q09



Jan.-Sep. 08

NET INTEREST INCOME


Net trading income


GROSS INCOME

Operating costs

Personnel expenses



OPERATING INCOME



INCOME BEFORE TAX

Income tax

NET INCOME

Minority interests



NET ATTRIBUTABLE PROFIT (except one-off operations)

1) In 2008, capital gains from Bradesco and extraordinary charges for early retirements.

Jan.-Sep. 09

,

302 n.m. (769)

(80) n.m. (16)

179 (45.0) 326

139 (30.1) 199

540 n.m. (260)

(649) 7.9 (601)

(410) (1.5) (416)

(88) 26.8 (69)

(151) 30.5 (115)

(109) (87.4) (861)

(257) n.m. (48)

(380) n.m. 218

(746) 7.9 (691)

374 30.8 286

(372) (8.3) (406)

11 n.m. (7)

(361) (12.6) (413)

- (100.0) 180

(361) (39.1) (592)

Δ%


30-09-08


Financial assets





Tangible assets

Other assets




Debt certificates




Other liabilities


Shareholders' funds


30-09-09

,

1,716 (70.7) 5,861

33,648 77.9 18,916

359 (92.6) 4,829

130 (90.4) 1,346

230 (93.4) 3,483

(20,055) 167.4 (7,500)

3,093 64.3 1,882

14,624 37.4 10,640

33,385 (3.6) 34,629

21,335 (1.1) 21,580

2,193 163.9 831

92,554 1.9 90,873

8,327 44.1 5,778

(96,139) 6.1 (90,627)

(1,959) n.m. (295)

162 (68.7) 517

(543) 121.1 (246)

26,482 13.7 23,297

(19,028) 11.4 (17,080)

Δ%

52

BUSINESS AREAS 3Q09Corporate Activities

This area has always combined the results of two units:

Financial Planning and Holdings in Industrial &

Financial Companies. It also books the costs from

central units with strictly corporate functions and makes

allocations to corporate and miscellaneous provisions,

eg, for early retirements. In 2009 it also includes the

newly created Real-Estate Management unit, which

brings together all the Group’s non-international

real-estate business.

The third quarter net interest income in Corporate

Activities continues making a positive contribution and

amounted to €302m in the first nine months of 2009,

compared against the –€769 recorded in the same period

of last year. This good performance was mainly due to

adequate management of the euro balance-sheet and the

favourable impact of sharply falling interest rates. The

higher net interest income allows to offset the reduction

of other revenues, such as net trading income, which was

down due to the lower gains realised. Gross income thus

was also positive, reaching €540m and compares very

favourably with the figure obtained in January-September

of 2008 (–€260m). The moderate increase in personnel

expenses (+7.9%) brought operating income to –€109m,

which is considerably less negative than the –€861m

from the same period of last year.

Impairment losses on financial assets account for a

€257m charge against the area, mainly due to

country-risk provisions. The allocations to provisions

and other profit/loss items charge another €380m.

These items basically reflected the application of

maximum prudence criteria when valuing assets whose

appraisals are updated to reflect current prices when

they are adjudicated, acquired or form part of the

real-estate fund. Finally, the area´s attributable profit

was –€361m, compared to –€413m in the same period

of the previous year (–€592m excluding one-offs).

Financial Planning

The Financial Planning unit administers the Group’s

structural interest and exchange-rate positions as well as

its overall liquidity and shareholders’ funds through the

Assets and Liabilities Committee (ALCO).

Managing structural liquidity helps to fund recurrent

growth in the banking business at suitable costs and

maturities, using a wide range of instruments that

provide access to several alternative sources of finance.

A core principle in the BBVA Group’s liquidity

management is to encourage the financial independence

of its subsidiaries in the Americas. The first nine months

of the year was characterised by the opening of the long

term finance markets, a consequence of the easing of

fears of a systemic collapse of the international financial

system. In BBVA’s case, the favourable evolution of the

liquidity gap continues for all the businesses over the

whole of 2009, which means it has not had a relevant

presence in the long-term finance markets. The Group’s

liquidity remains sound because of retail customer

deposits weighting in the balance sheet structure and the

ample collateral available as a second source of

liquidity. For the last quarter of 2009 and the coming

2010, the Group’s current and potential sources of

liquidity easily surpass expected drainage.

The Group’s capital management pursues two key

goals: Firstly, maintaining capital levels appropriate to

the Group’s business targets in all the countries where it

operates. And secondly, at the same time, maximising

returns on shareholder funds through efficient capital

allocation to the different units, good management of

the balance sheet and proportionate use of the different

instruments that comprise the Group’s equity: shares,

preferred securities and subordinate debt. In September

the bank placed a €2,000m five year mandatory

convertible bond issue which provides additional

flexibility and manoeuvring room in capital

management.

BBVA manages the exchange-rate exposure on its

long-term investments (basically stemming from its

franchises in the Americas) to preserve its capital ratios

and bring stability to the Group’s income statement

while controlling impacts on reserves and the cost of

this risk management. In the first nine months of 2009,

BBVA continued to pursue an active policy to hedge its

investments in Mexico, Chile, Peru and the dollar area.

Its aggregate hedging was close to 50%. Apart from

corporate-level hedging, some subsidiary banks hold

dollar positions at local level. Additionally, the Group

hedges its exchange-rate exposure on expected 2009

and 2010 earnings from the Americas. During the third

quarter of this year, this strategy made it possible to

mitigate the impact of the American currencies’

depreciation against the euro, and at the same time the

hedging for 2010 has been extended.

53

3Q09 BUSINESS AREASCorporate Activities

The unit also actively manages the Group’s structural

interest-rate exposure on its balance sheet. This keeps

the performance of short and medium-term net interest

income more uniform by cutting out interest-rate

fluctuations. During the first nine months of 2009, it

has maintained its hedging against a less positive

economic scenario in Europe for 2009-2010, while the

risk on its USA and Mexico balance sheets remains

within comfort parameters. These strategies are

managed both with hedging derivatives (caps, floors,

swaps, FRA’s, etc) and with balance-sheet instruments

(mainly top-rated government bonds). As September

2009 ended, the Group had asset portfolios

denominated in euros, US dollars and Mexican pesos.

Holdings in Industrial and FinancialCompanies

This unit manages its portfolio of shares in companies

operating in the telecommunications, media, electricity,

oil, gas and finance sectors. Like Financial Planning, this

unit forms part of the Group’s Finance Department.

BBVA operates this portfolio with strict requirements

regarding its risk-control procedures, economic-capital

consumption and return on investment, diversifying

investments over different sectors. It also applies

dynamic management techniques to holdings through

monetisation and coverage strategies. During the first

nine months of 2009, it has made investments for

€313m and divestments for €527m.

At 30-Sep-09, the industrial and financial holdings

portfolio was marked to market at €4,448m with latent

capital gains of €1,467m.

Real-Estate Management

Given the current economic scenario and the outlook,

BBVA set up a Real-Estate Management unit to apply

specialist management to real-estate assets from

foreclosures, assets assigned in lieu of payment, purchases

of distressed assets and the BBVA Propiedad real-estate

fund. The earnings generated by this new unit are not

significant, as it is conceived as a long-term project.

54

3Q09

In the third quarter of 2009 BBVA launched its Global

Financial Education Plan (El dinero en nuestras vidas). The

new plan is part of the bank’s corporate responsibility strategy

and has a budget of €26m. It will run for three years (2009-

2011) in all countries where the Group is present and will have

specific programmes for each population group. In the first

year there will be 440,000 direct beneficiaries. This is one of

the biggest worldwide initiatives of its kind in the private

sector. BBVA is making an extensive commitment to financial

education and access to financial services. In Mexico and South

America the programme will target “banked” and “bankable”

people. In the United States it will address children and young

people. In Spain there will be a special programme on future

values (Plan Valores de futuro) for children in primary and

secondary schools. More than 1,600 schools and 200,000

pupils are expected to participate in the first phase.

Other relevant events connected to corporate responsibility

were:

Customer focusIn Colombia BBVA responded to women’s needs by launching

a credit card for female customers. The bank will donate 2%

of interest generated by the card to breast cancer prevention

programmes.

Responsible products and servicesThe International Federation of Pension Funds Administrators

has invited BBVA to join this organisation, which represents 21

countries that have private pension systems. In addition the bank

launched a new mortgage in Spain for young people (Hipoteca

Protegida BlueBBVA) with free unemployment insurance.

Responsible HR managementBBVA has started a campaign to prevent the spread of the

H1N1 Flue. The Group’s medical service has published a

series of recommendations and procedures to protect the

health and safety of its employees on the corporate intranet. In

addition BBVA Banco Francés (Argentina) has joined a pilot

programme to issue gender equality certificates with the aim

of encouraging this practice at other companies.

Environmental management and climate changeBBVA signed the Copenhagen Communiqué together with more

than 500 important companies. The goal is to demonstrate the

readiness of international business leaders to tackle climate

change and the search for solutions within the framework of the

United Nations. Furthermore BBVA Bancomer has announced

plans for a new headquarters building, which will achieve

important savings in utilities and improve the quality of life of

its employees on the personal and professional levels.

Commitment to societyEDUCATION. BBVA Bancomer (Mexico) will run personal

finance workshops at its branches, in lecture halls and via

cellphones.

SOCIAL ACTION PLAN FOR LATIN AMERICA. BBVA Banco

Francés’s integration scholarship programme in Argentina

invested 2 million pesos in 2008 and granted scholarships to

over 800 students. It recently awarded a further 73

scholarships to pupils at a school in Mendoza. So far this year

BBVA Colombia has donated 18,000 backpacks containing

educational material and 4,700 study grants. In the next

academic year the BBVA Bancomer Foundation will increase

the number of its scholarships to 15,000 (previously 10,600)

in 18 states and 143 municipalities of Mexico, covering 60%

of this country.

COMMUNITY SUPPORT. BBVA will provide the Spanish

Food Bank Federation with food products for distribution to

the poor.

PROMOTION OF CORPORATE RESPONSIBILITY. BBVA

Bancomer has issued its second corporate responsibility report

and BBVA Banco Continental has published its fourth. Both

obtained the maximum classification of the Global Reporting

Initiative: A+.

THE BBVA FOUNDATION. The foundation is providing

€3.6m in finance for 18 scientific projects in the fifth round of

research grants in the area of ecology and conservation biology.

BBVA and the sustainability indicesBBVA has maintained its privileged position in the Dow Jones

Sustainability Indexes following an annual review. It is well

above the financial sector average in the three areas concerned

(financial, environmental and social). Its participation in such

indices in shown below:

Corporate responsibility

BBVA’s participation (%)

DJSI World 0.81

DJSI STOXX 1.86

DJSI EURO STOXX 3.55

ASPI Eurozone Index 2.58

Ethibel Sustainability Index Excellence Europe 2.10

Ethibel Sustainability Index Excellence Global 1.30

FTSE KLD Global Sustainability Index 0.72

FTSE KLD Global Sustainability Index Ex-US 1.23

FTSE KLD Europe Sustainability Index 2.09

FTSE KLD Europe Asia Pacific Sustainability 1.41

Main sustainability indices in whichBBVA participates

(1) In May 2009 FTSE and KLD merged their sustainability indices.

(1)

INVESTOR RELATIONS

• Paseo de la Castellana, 81 – 19th floorE-28046 MADRID -SPAINPhone: +34 91 374 62 01Fax: +34 91 537 85 12e-mail: [email protected]

• 1345 Av. of the Americas, 45th floorNEW YORK NY 10105 - USAPhone: (+1 212) 728 16 60 Fax: (+1 212) 333 29 05e-mail: [email protected]

INTERNET INFO http: //www.bbva.com

Documents

Contents · 10/27/2009 · Market capitalisation (million euros) ... European Union and in conformity with Bank of Spain Circular 4/2004, together with the changes introduced therein